SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PXRE GROUP LTD.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[PXRE LOGO]
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 30, 2002
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of
PXRE GROUP LTD. ("PXRE" or "we") will be held on May 30, 2002 commencing at 9:00
a.m., local time, at The Fairmont Hamilton Princess, 76 Pitts Bay Road,
Hamilton, Bermuda for the following purposes:
(1) To elect three members of our Board of Directors who, with the
eight other directors whose terms of office do not expire at this Annual
Meeting, will constitute our full Board, as described in the Proxy
Statement dated April 19, 2002 accompanying this Notice of Annual General
Meeting (the "Proxy Statement");
(2) To approve the recommendation of our Board of Directors that KPMG
be appointed as our independent auditors for the fiscal year ending
December 31, 2002 and to refer the determination of the auditors'
remuneration to our Board of Directors;
(3) To approve the adoption of the PXRE 2002 Officer Incentive Plan
(the "2002 Officer Incentive Plan") under which 1,000,000 of our Common
Shares would be reserved for issuance pursuant to grants of restricted
stock or upon the exercise of options granted under the 2002 Officer
Incentive Plan; and
(4) To approve the adoption of an amendment to the PXRE Employee Stock
Purchase Plan (the "Employee Purchase Plan") to increase the number of
shares of Common Shares authorized thereunder by 100,000.
Only shareholders of PXRE at the close of business on April 5, 2002, as
shown by the transfer books of PXRE, are entitled to notice of, and to vote at,
this Annual General Meeting and any adjournments thereof.
By Order of the Board of Directors
DAVID J. DOYLE, Secretary
Hamilton, Bermuda
April 19, 2002
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ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THIS ANNUAL GENERAL MEETING IN
PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY AT THEIR EARLIEST CONVENIENCE.
ANY PROXY GIVEN MAY BE REVOKED BY SUBMITTING, AT LEAST TWO (2) HOURS PRIOR TO
THE COMMENCEMENT OF THE ANNUAL GENERAL MEETING, EITHER A WRITTEN NOTICE OF SUCH
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE TO US AT OUR MAILING
ADDRESS, SUITE 231, 12 CHURCH STREET, HAMILTON HM 11, BERMUDA, ATTN: SECRETARY.
ATTENDANCE AT THE ANNUAL GENERAL MEETING BY A SHAREHOLDER WHO HAS GIVEN A PROXY
SHALL NOT IN AND OF ITSELF CONSTITUTE A REVOCATION OF SUCH PROXY.
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IMPORTANT: PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
PROXY STATEMENT
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ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF PXRE GROUP LTD.
MAY 30, 2002
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of PXRE GROUP LTD., 99 Front Street, Hamilton HM 12,
Bermuda ("PXRE" or "we"), of proxies from the holders of our common shares, par
value $1.00 per share (the "Common Shares") and our convertible voting preferred
shares, par value $1.00 per share (the "Preferred Shares" and collectively with
the Common Shares, the "Shares") for use at the Annual General Meeting of
Shareholders to be held on May 30, 2002 and at any and all adjournments thereof
(the "Annual Meeting"). Shares represented at the Annual Meeting by a properly
executed and returned Proxy will be voted at the Annual Meeting in accordance
with the instructions noted thereon, or if no instructions are noted, the Proxy
will be voted in favor of the proposals set forth in the Notice of Annual
Meeting. Any Proxy given may be revoked by submitting, at least two (2) hours
prior to the commencement of the Annual Meeting, either a written notice of such
revocation or a duly executed Proxy bearing a later date to us at our mailing
address, Suite 231, 12 Church Street, Hamilton HM 11, Bermuda, Attn: Secretary.
Attendance at the Annual Meeting by a shareholder who has given a Proxy shall
not in and of itself constitute a revocation of such Proxy.
Our mailing address is Suite 231, 12 Church Street, Hamilton HM 11,
Bermuda. The Notice of Annual General Meeting of Shareholders, this Proxy
Statement and the accompanying Proxy were first transmitted to shareholders on
or about April 19, 2002.
We will bear the cost of preparing, assembling and mailing this Proxy
Statement and the material enclosed herewith. Our directors, officers and
employees may solicit Proxies orally or in writing, without additional
compensation. Our regularly retained investor relations firm, Corporate
Communications Inc., may also be called upon to solicit Proxies by telephone or
by mail. We will reimburse brokers, fiduciaries and custodians for their costs
in forwarding proxy materials to beneficial owners of Shares held in their
names.
OUTSTANDING STOCK AND VOTING RIGHTS
Our Board of Directors fixed the close of business on April 5, 2002 as the
record date (the "Record Date") for the determination of shareholders entitled
to receive notice of, and to vote at, our Annual Meeting. As of the Record Date,
(i) 11,947,682 Common Shares were issued and outstanding and held by
approximately 1,200 shareholders, including beneficial owners holding shares in
"street name" accounts; and (ii) 15,000 Preferred Shares were issued and
outstanding and held of record by 6 shareholders. The presence at the Annual
Meeting in person or by proxy of the holders of a majority of the outstanding
shares (giving effect to the limitations on voting referred to below) carrying
the right to vote on a matter is necessary to constitute a quorum for the
transaction of business at our Annual Meeting.
Each Common Share entitles the holder thereof to one vote on each matter to
be voted upon at the Annual Meeting, except that if a person constructively or
beneficially, directly or indirectly, owns more than 9.9% of the total voting
power of all issued and outstanding shares entitled to vote on such matter, the
voting rights with respect to such shares will be limited, in the aggregate, to
voting power of 9.9%, as specified in our
Bye-Laws. As of the Record Date, holders of the Common Shares are entitled to
exercise approximately 59.2% of the votes that may be cast at the Annual Meeting
on all matters submitted other than the election of directors. With respect to
the election of directors, the holders of the Common Shares are entitled to
exercise 100% of the votes that may be cast at the Meeting. Due to limitations
on voting power discussed below, as of the Record Date, the aggregate votes
represented by the Common Shares with respect to the election of the Class I
directors were 11,297,076 votes.
On April 4, 2002, we issued $150 million in Preferred Shares to certain
investors pursuant to a Share Purchase Agreement, dated as of December 10, 2001
(the "Share Purchase Agreement"), between PXRE and Capital Z Financial Services
Fund II, L.P., Capital Z Financial Services Private Fund II, L.P. (together with
Capital Z Financial Services Fund II, L.P., "Capital Z"), Reservoir Capital
Master Fund, L.P., Reservoir Capital Partners, L.P. (together with Reservoir
Capital Master Fund, L.P., "Reservoir") and Richard E. Rainwater ("Rainwater")
(each of Capital Z, Reservoir and Rainwater and their permitted assigns, a
"Preferred Shareholder", and together, the "Preferred Shareholders"). This
transaction (the "Preferred Share Insurance") involved the issuance of:
(i) 7,500 shares of Series A Convertible Voting Preferred Shares (the
"Series A Preferred Shares"), allocated to two sub-series of shares, 5,000
shares allocated to sub-series A1 ("A1 Preferred Shares") and 2,500 shares
allocated to sub-series A2 ("A2 Preferred Shares");
(ii) 5,000 shares of Series B Convertible Voting Preferred Shares (the
"Series B Preferred Shares"), allocated to two sub-series of shares,
3,333.333 shares allocated to Series B1 ("B1 Preferred Shares") and
1,666.667 shares allocated to Series B2 ("B2 Preferred Shares"); and
(iii) 2,500 shares of Series C Convertible Voting Preferred Shares
(the "Series C Preferred Shares"), allocated to two sub-series of shares,
1,666.667 shares allocated to Series C1 ("C1 Preferred Shares") and 833.333
shares allocated to Series C2 ("C2 Preferred Shares").
Each Preferred Share entitles the holder thereof to vote on a fully
converted basis with the Common Shares, together as a class, on all matters
which are submitted to a vote of the shareholders, other than the election of
Class I, II and III directors, except that in no event shall Capital Z,
Reservoir, Rainwater and their respective affiliates be permitted to exercise
voting rights, collectively through our securities, in excess of 49.9% of our
aggregate voting power on any shareholder matter. Under our Bye-Laws, absent a
Board waiver, no person is entitled to exercise voting power on a matter in
excess of a maximum limitation of 9.9% of the votes conferred on all of our
shares entitled to vote on such matter, after taking into consideration all
votes held directly, indirectly, beneficially or through attribution. The Board
has determined to waive this requirement with respect to Capital Z (including,
for such purpose, certain of its affiliates), but not with respect to Rainwater
or Reservoir. Due to the application of the above limitation by the Board, as of
the Record Date, holders of the Preferred Shares are entitled to exercise 40.8%
of the votes that may be cast at the Annual Meeting on all matters submitted
other than the election of Class I directors.
All matters referenced in this Proxy Statement upon which the shareholders
will be asked to consider and vote upon will, in accordance with our Bye-Laws,
be decided by an ordinary resolution, that is, a resolution passed by a simple
majority of votes cast in person or by proxy at the Annual Meeting entitled to
vote on such matter. A resolution put to the vote of the Annual Meeting will be
decided on by a show of hands, unless a poll has been demanded pursuant to our
Bye-Laws. On matters to be decided by ordinary resolution, shares represented at
the Annual Meeting whose votes are withheld on any matter, shares which are
represented by "broker non-votes" (i.e., shares held by brokers or nominees
which are represented at the Annual Meeting but with respect to which the broker
or nominee is not empowered to vote on a particular proposal) and the shares
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which abstain from voting on any particular matter are not included in the
tabulation of the shares voting on such matter but are counted for quorum
purposes. Member brokerage firms of The New York Stock Exchange, Inc. (the
"NYSE") that hold shares in street name for beneficial owners may, to the extent
that such beneficial owners do not furnish voting instructions, vote in their
discretion upon all proposals submitted for shareholder action other than the
proposal relating to the adoption of the PXRE 2002 Officer Incentive Plan.
The following table indicates those persons known to us (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) who own beneficially more than 5% of
the combined voting power of our Common Shares and Preferred Shares as of the
Record Date:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP VOTING RIGHTS(1)
-------------- ------------------- -------------------- ----------------
Common Shares Phoenix Home Life Mutual................ 1,131,700 shares(2) 5.6%
Insurance Company
One American Row
Hartford, CT 06115
Common Shares DePrince, Race & Zollo, Inc............. 1,474,300 shares(3) 7.3%
201 S. Orange Avenue
Suite 850
Orlando, FL 32801
Common Shares Royce & Associates, Inc................. 1,001,503 shares(4) 5.0%
and Affiliates
1414 Avenue of the Americas
New York, NY 10019
Common Shares FMR Corp. and Affiliates................ 1,189,000 shares(5) 5.9%
82 Devonshire Street
Boston, MA 02109
Common Shares SAB Capital Advisors, L.L.C............. 1,178,900 shares(6) 5.9%
and Affiliates
650 Madison Avenue
26th Floor
New York, NY 10022
Common Shares James G. Dinan.......................... 992,785 shares(7) 5.0%
York Capital Management L.P.
& Affiliates
350 Park Avenue
4th Floor
New York, NY 10022
Preferred Capital Z Partners, Ltd. & Affiliates... 7,500 shares(8)(9) 23.9%(10)
Shares
54 Thompson Street
New York, NY 10012
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NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP VOTING RIGHTS(1)
-------------- ------------------- -------------------- ----------------
Preferred Reservoir Capital Management L.L.C...... 5,000 shares(11)(8) 9.3%(10)
Shares
& Affiliates
650 Madison Avenue
26th Floor
New York, NY 10022
Preferred Richard E. Rainwater.................... 2,400 shares(12)(8) 7.6%(10)
Shares
777 Main Street
Suite 2250
Fort Worth, TX 76102
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(1) Reflects percentage of voting rights on all matters being submitted to the
Annual Meeting other than the election of Class I directors and assumes
conversion of all Preferred Shares to Common Shares at a conversion price
of $15.69 per share. The Preferred Shares are not entitled to vote on the
election of Class I directors. Under our Bye-Laws, absent a Board waiver,
no person is entitled to exercise voting power on a matter in excess of a
maximum limitation of 9.9% of the votes conferred on all of our shares
entitled to vote on such matter, after taking into consideration all votes
held directly, indirectly, beneficially or through attribution.
Accordingly, certain shareholders will have their voting rights for the
election of Class I directors reduced to reflect this limitation and the
total outstanding votes entitled to be cast for the election of Class I
directors will be reduced to 11,297,076 votes. The votes and percentage of
votes for the election of Class I directors for each of the above listed
holders of Common Shares is as follows: DePrince -- 1,118,411 votes or
9.9%; FMR -- 1,118,411 or 9.9%; Phoenix Home Life -- 1,118,411 votes or
9.9%; SAB -- 1,118,411 votes or 9.9%; Royce -- 1,001,503 or 8.9%; and
Dinan -- 992,785 or 8.8%.
(2) According to the Schedule 13G and Form 4 filed with the Securities and
Exchange Commission (the "Commission") by Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life"), Phoenix Home Life may be deemed to
beneficially own the 1,131,700 Common Shares indicated opposite Phoenix
Home Life's name in the above table. Phoenix Home Life reports sole voting
and dispositive power in respect of such 1,131,700 Common Shares.
(3) According to the Schedule 13G filed with the Commission by DePrince, Race &
Zollo, Inc. ("DePrince"), DePrince may be deemed to beneficially own the
1,474,300 Common Shares indicated opposite DePrince's name in the above
table. DePrince reports sole voting and dispositive power in respect of
such 1,474,300 Common Shares.
(4) According to the Schedule 13G filed with the Commission by Royce &
Associates, Inc. ("Royce"), Royce may be deemed to beneficially own the
1,001,503 Common Shares indicated opposite its name in the above table.
Royce reports sole voting and dispositive power in respect of such
1,001,503 Common Shares.
(5) According to the Schedule 13G filed with the Commission by FMR Corp.
("FMR") and various affiliates thereof, FMR, Edward C. Johnson 3d and
Abigail P. Johnson and other members of the Johnson family may be deemed to
beneficially own the 1,189,000 Common Shares indicated opposite FMR's name
in the above table, by virtue of FMR's 100% ownership of Fidelity
Management & Research Company ("Fidelity"). Fidelity, in its capacity as a
registered investment advisor to Fidelity Low Priced Stock Fund may be
deemed to be the beneficial owner of such 1,189,000 Common Shares. Neither
FMR, Mr. Johnson nor Ms. Johnson reports sole or shared voting power in
respect of the
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1,189,000 Common Shares. Each of FMR, Mr. Johnson and Ms. Johnson reports
sole dispositive power in respect of such 1,189,000 Common Shares.
(6) According to the Schedule 13G filed with the Commission by SAB Capital
Advisors, L.L.C. ("SABCA"), SAB Capital Partners, L.P. ("SABCPI"), SAB
Capital Partners II, L.P. ("SABCPII"), SAB Capital Management, L.L.C.
("SABCM"), SAB Overseas Capital Management, L.P. ("SABOCM") and Scott A.
Bommer, as a group (collectively, "SAB"), SAB may be deemed to beneficially
own the 1,178,900 Common Shares indicated opposite their name in the above
table by virtue of SABCPI's ownership of 693,584 Common Shares, SABCPII's
ownership of 33,684 Common Shares (as to which SABCA is reported to
exercise shared voting and dispositive power for said 727,268 Common
Shares), and SABOCM's ownership of 451,632 Common Shares (as to which SABCM
is reported to possess shared voting and dispositive power for said 451,632
Common Shares). SAB reports that Mr. Bommer may be deemed to beneficially
own and exercise shared voting and dispositive power with respect to such
1,178,900 Common Shares beneficially held by SAB.
(7) According to the Schedule 13G filed with the Commission, James G. Dinan
("Dinan") beneficially owns the 992,785 Common Shares indicated opposite
his name in the above table, which includes 486,900 Common Shares
beneficially owned by York Investment Limited ("York Investment"), 181,800
Common Shares beneficially owned by York Capital Management L.P. ("York
Capital"), 56,000 Common Shares beneficially owned by York Select L.P.
("York Select"), 44,000 Common Shares beneficially owned by York Select
Unit Trust ("York Select Trust"), 168,300 Common Shares beneficially owned
by York Offshore Investors Unit Trust ("York Offshore"), and 55,785 Common
Shares held by certain other funds and accounts (the "Managed Accounts")
over which Dinan has discretionary investment authority. According to the
Schedule 13G filed with the Commission, Dinan, an individual, is the Senior
Managing Member and holder of a controlling interest in Dinan Management
L.L.C. ("Dinan Management"), York Select Domestic Holdings, LLC ("York
Select Domestic Holdings"), York Select Offshore Holdings, LLC ("York
Select Offshore Holdings"), and York Offshore Holdings, L.L.C. ("York
Offshore LLC"). Dinan is also a Director and holder of a controlling
interest in York Offshore Holdings, Limited ("York Offshore Limited"). York
Offshore Limited is the investment manager of York Investment. Dinan
Management is the General Partner of York Capital. York Select Domestic
Holdings is the General Partner of York Select. York Select Offshore
Holdings is the investment manager of York Select Trust. York Offshore LLC
is the investment manager of York Offshore. Dinan is the President and sole
shareholder of JGD Management Corp., which manages the Managed Accounts.
(8) Following the execution of the Share Purchase Agreement, a Schedule 13D was
filed jointly on behalf of Capital Z Financial Services Fund II, L.P.
("Capital Z Fund II"), Capital Z Financial Services Private Fund II, L.P.
("Capital Z Private Fund II"), Capital Z Partners, L.P. ("Capital Z L.P."),
and Capital Z Partners, Ltd. ("Capital Z Ltd.", and together with Capital Z
Fund II, Capital Z Private Fund II and Capital Z L.P., the "Capital Z
Reporting Persons"), Reservoir Capital Partners Master Fund, L.P.
("Reservoir Master Fund"), Reservoir Capital Partners, L.P. ("Reservoir
Capital Partners"), Reservoir Capital Group, L.L.C. ("Reservoir Capital
Group"), Reservoir Capital Management, L.L.C. ("Reservoir Management") and
Reservoir Capital Associates, L.P. ("Reservoir Associates" and together
with Reservoir Master Fund, Reservoir Capital Partners, Reservoir Capital
Group and Reservoir Management, the "Reservoir Reporting Persons") and
Richard E. Rainwater ("Rainwater" and collectively with the Capital Z
Reporting Persons and the Reservoir Reporting Persons, the "Reporting
Persons"). According to this Schedule 13D, each of the Reporting Persons
reports beneficial ownership of 9,710,579 Common Shares, but each sub-group
of Reporting Persons disclaims beneficial ownership of all Common Shares or
Preferred Shares that may be owned or deemed owned by any of
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the other sub-groups of Reporting Persons. In connection with the closing
of the Preferred Share Issuance, Rainwater assigned his rights to acquire
2,400 Series C Preferred Shares to RER Reinsurance Holdings, L.P., a Texas
limited partnership controlled by Rainwater. Rainwater also assigned his
rights to acquire the remaining 100 Series C Preferred Shares to Mr. Robert
Stavis, the director designated by the holders of the Series C Preferred
Shares.
(9) According to the Schedule 13D filed with the Commission, Capital Z Ltd.
reports shared dispositive and voting power with respect to 4,780,115
Common Shares to be received upon conversion of the 7,500 Preferred Shares
indicated opposite its name in the above table, which includes 4,973.508 A1
Preferred Shares and 2,486.754 A2 Preferred Shares owned by Capital Z Fund
II and 26.492 A1 Preferred Shares and 13.246 A2 Preferred Shares owned by
Capital Z Private Fund II. Capital Z Ltd. is the sole general partner of
Capital Z L.P. Capital Z L.P. is the sole general partner of Capital Z Fund
II and Capital Z Private Fund II. According the Schedule 13D filed with the
Commission, each of the Capital Z Reporting Persons disclaims beneficial
ownership of all Common Shares or Preferred Shares that may be owned or
deemed owned by any of the Reservoir Reporting Persons or Rainwater. Under
our Bye-Laws, absent a Board waiver, no person is entitled to exercise
voting power on a matter in excess of a maximum limitation of 9.9% of the
votes conferred on all of our shares entitled to vote on such matter, after
taking into consideration all votes held directly, indirectly, beneficially
or through attribution. The Board has determined to waive this requirement
with respect to the Capital Z Reporting Persons (including, for such
purpose, certain of their affiliates).
(10) Assumes conversion of all Preferred Shares held by such person to Common
Shares at a conversion price of $15.69 per share.
(11) According to the Schedule 13D filed with the Commission, Reservoir Capital
Group reports shared dispositive and voting power with respect to 3,337,093
Common Shares, which includes 3,186,743 Common Shares to be received upon
conversion of the 5,000 Preferred Shares indicated opposite its name in the
above table and 150,350 Common Shares held by its affiliates. Reservoir
Partners owns 2,853.333 B1 Preferred Shares, 1,426.667 B2 Preferred Shares
and 128,145 Common Shares. Reservoir Master Fund owns 480 B1 Preferred
Shares, 240 B2 Preferred Shares and 21,855 Common Shares. Reservoir
Associates owns 350 Common Shares. Reservoir Management is the managing
member of Reservoir Group. Reservoir Capital Group is the general partner
of Reservoir Capital Partners, Reservoir Master Fund and Reservoir
Associates. According the Schedule 13D filed with the Commission, each of
the Reservoir Reporting Persons disclaims beneficial ownership of all
Common Shares or Preferred Shares that may be owned or deemed owned by any
of the Capital Z Reporting Persons or Rainwater. Under our Bye-Laws, absent
a Board waiver, no person is entitled to exercise voting power on a matter
in excess of a maximum limitation of 9.9% of the votes conferred on all of
our shares entitled to vote on such matter, after taking into consideration
all votes held directly, indirectly, beneficially or through attribution.
Accordingly, the Reservoir Reporting Persons will only be permitted to
exercise 1,860,621 votes at the Annual Meeting with respect to matters
other than the election of Class I directors and will not be permitted to
exercise any votes with respect to the election of Class I directors.
(12) According to the Schedule 13D filed with the Commission, Rainwater reports
sole voting and dispositive power with respect to 1,593,372 Common Shares
to be received upon conversion of 2,500 Preferred Shares indicated opposite
his name in the above table, consisting of 1,666.667 C1 Preferred Shares
and 833.333 C2 Preferred Shares owned by Rainwater. According to the
Schedule 13D filed with the Commission, Rainwater disclaims beneficial
ownership of all Common Shares or Preferred Shares that may be owned or
deemed owned by any of the Reservoir Reporting Persons or the Capital Z
Reporting Persons. In connection with the closing of the Preferred Share
Issuance, Rainwater assigned his rights to
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acquire 2,400 Series C Preferred Shares to RER Reinsurance Holdings, L.P.,
a Texas limited partnership controlled by Rainwater. Rainwater also
assigned his rights to acquire the remaining 100 Series C Preferred Shares
to Mr. Robert Stavis, the director designated by the holders of the Series
C Preferred Shares.
To our knowledge, no other person owns of record or beneficially more than
5% of our outstanding Common Shares or Preferred Shares as of the Record Date.
NOMINEES FOR ELECTION AS DIRECTORS
Our Bye-Laws provide for the election of directors by the shareholders. In
accordance with the Bye-Laws, our Board of Directors is divided into four
classes (Classes I, II, III and IV) with Class I, II and III being as nearly
equal in number as possible. Classes I, II and III are elected by the holders of
our Common Shares. With respect to such classes, the terms of office of the
members of one class expire and a successor class is elected at each Annual
General Meeting of the shareholders. The holders of our Preferred Shares and
Convertible Common Shares have the right to designate up to four Class IV
Directors, but do not have the right to vote for the election of Class I, II and
III directors. Subject to certain share ownership requirements, holders of the
Series A Preferred Shares and Class A Common Shares are entitled to select up to
two directors, the holders of the Series B Preferred Shares and Class B Common
Shares, are entitled to select one director, and the holders of the Series C
Preferred Shares and Class C Common Shares, are entitled to select one director.
In the event any Purchaser fails to maintain any requisite ownership level and
relinquishes a Board seat as a result, such Board seat will thereafter be filled
in accordance with Bye-Law 22 of the Bye-Laws.
At the Annual Meeting, the terms of office of the Class I directors will
terminate. Therefore, the Board of Directors has nominated Gerald L. Radke,
Wendy Luscombe and Franklin D. Haftl (all of whom are also presently serving on
the Board) for re-election as Class I directors to serve three-year terms until
the Annual General Meeting of shareholders is held in 2005 and until their
successors have been elected and qualified. It is intended that Proxies will be
voted in favor of these persons. If, for any reason, any of the nominees is not
able or willing to serve as a director when the election occurs (a situation
which is not presently contemplated), it is intended that the Proxies will be
voted for the election of a substitute nominee in accordance with the judgment
of the Proxy holder.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION
OF THE THREE NOMINEES FOR DIRECTOR NAMED ABOVE.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The following are our Class I, II and III directors as of the Record Date:
Gerald L. Radke (57) has been the President, Chief Executive Officer
and a director of PXRE (and its predecessor PXRE Corporation ("PXRE
Delaware"), since 1986 (and its Chairman of the Board of Directors since
June 1995). From August 1993 until the merger (the "Merger") in December
1996 of Transnational Re Corporation ("TREX") with and into PXRE Delaware,
Mr. Radke also served as President, Chief Executive Officer and Chairman of
the Board of Directors of TREX.
F. Sedgwick Browne (59) is a senior counsel at Morgan, Lewis & Bockius
LLP (law firm), specializing in the insurance and reinsurance industry.
Prior to becoming a partner of Morgan, Lewis &
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Bockius LLP on October 1, 1994, he was a partner of Lord Day & Lord,
Barrett Smith. Mr. Browne was elected a director of PXRE Delaware in June
1999.
Robert W. Fiondella (59) has been Chairman of the Board of Directors
and Chief Executive Officer of The Phoenix Companies, Inc. since November
2000 and Chairman and Chief Executive Officer of Phoenix Home Life since
February 1994. From July 1992 to February 1994, he was President and
Principal Operating Officer of Phoenix Home Life, and from February 1989 to
June 1992, he was President and Chief Operating Officer of Phoenix Mutual
Life Insurance Company, a predecessor of Phoenix Home Life ("Phoenix
Mutual"). Mr. Fiondella is also a director of Phoenix Charter Oak Trust
Company, as well as an officer and director of various other Phoenix Home
Life subsidiaries. Mr. Fiondella is also a director of Hilb, Rogal and
Hamilton, an insurance brokerage firm.
Franklin D. Haftl (67) was elected a director of PXRE Delaware in
February 1997 and has been in the insurance and reinsurance industry since
1958. He served as President and Chief Executive Officer of Unione Italiana
Reinsurance Company of America, Inc. from October 1988 to March 1994. Mr.
Haftl served as a director of TREX from January 1994 until the Merger in
December 1996. Mr. Haftl is a certified arbiter member of the American
Arbitration Association and has served and continues to serve as an umpire
on numerous arbitration panels adjudicating commercial insurance and
reinsurance related disputes.
Halbert D. Lindquist (56) was appointed by the Board of Directors in
November 2000 to fill the casual vacancy that arose upon the retirement of
Mr. Wilson Wilde from the Board. Mr. Lindquist is the Senior Investment
Officer for Blackstone Alternative Asset Management, where he is
responsible for managing a $1.5 billion fund of funds hedge fund portfolio.
Mr. Lindquist is also a principal of Tucson Asset Management, Inc. and
Presidio Securities, Inc.
Wendy Luscombe (50) was elected a director of PXRE Delaware in
November 1993 and has been a principal of WKL Associates, Inc., a company
which provides U.S. real estate investment management services to PruPim, a
subsidiary of Prudential U.K., since May 1994. Ms. Luscombe is also a
Fellow of the Royal Institute of Chartered Surveyors, as well as a Member
of the Chartered Institute of Arbitrators. Ms. Luscombe has been a director
of Amadeus Vision Capital, plc since 1999, Endeavour Real Estate
Securities, Ltd. since 2000, Zweig Total Return Fund Inc., a public
company, since 2001, and The Zweig Fund Inc., a public company, since 2001.
Philip R. McLoughlin (55) has been Chairman, Chief Executive Officer
and a director of Phoenix Investment Partners, Ltd. since October 1995.
Phoenix Investment Partners, Ltd. is an investment management company and a
subsidiary of The Phoenix Companies, Inc. Mr. McLoughlin has been Executive
Vice President, Chief Investment Officer and a Director of the Phoenix
Companies, Inc. since November 2000 and he has also been Executive Vice
President -- Investments of Phoenix Home Life since 1988. Mr. McLoughlin is
currently president and a director or trustee of 31 registered investment
companies which are affiliated with Phoenix Home Life, a director of both
World Trust and Emerging World Trust, each a Luxembourg organized
investment trust, and Phoenix Charter Oak Trust Company, as well as a
director and officer of various other Phoenix Home Life subsidiaries.
Upon closing of the Preferred Share Issuance on April 4, 2002, the
Preferred Shareholders designated the following individuals as Class IV
directors:
Bradley E. Cooper (35) (Capital Z Director) is a Partner and
co-founder of Capital Z. Prior to joining Capital Z, Mr. Cooper served in
similar roles at Insurance Partners Advisors, L.P. ("Insurance
8
Partners") and International Insurance Investors, L.P. Prior to the
formation of Insurance Partners, Mr. Cooper was a Vice President of
International Insurance Advisors, Inc. and was an investment banker in the
Financial Institutions Group at Salomon Brothers, Inc. Mr. Cooper serves on
the Board of Directors of Highlands Insurance Group, Inc., CERES Group,
Inc., Universal American Financial Corp., SNTL Corp. and certain of its
subsidiaries and American Capital Access Holdings, LLC and certain of its
subsidiaries.
Susan S. Fleming (32) (Capital Z Director) is a Partner of Capital Z.
Prior to joining Capital Z, Ms. Fleming served as Vice President of
Insurance Partners and was an investment banker in the Mergers and
Acquisitions Financial Institutions Group at Morgan Stanley & Co. Ms.
Fleming currently serves on the Board of Directors of Universal American
Financial Corp. and CERES Group, Inc.
Craig A. Huff (37) (Reservoir Director) is a Managing Director and
co-founder of Reservoir Capital Group, a New York based private investment
firm. Prior to co-founding Reservoir, he was a partner at Ziff Brothers
Investments, a generalist investment firm managing Ziff family capital.
Previously, he served as a Nuclear Submarine Officer in the U.S. Navy. Mr.
Huff currently serves on the Board of Directors of Orange-Co. Inc. and ARC
Systems, Inc.
Robert Stavis (39) (Rainwater Director) is a Partner of Bessemer
Venture Partners, a private venture capital firm, and focuses on
investments in financial services technologies and business process
automation. Prior to joining Bessemer, he was the co-head of global
arbitrage trading for Salomon Smith Barney. While at Salomon Smith Barney,
Mr. Stavis served as a member of the firm's operating committee, risk
management committee and the control and compliance committee. He currently
serves on the Board of Directors of Access International Financial
Services, Inc., CapitalThinking, Inc., Diogenes, Inc. and Supercritial
Combustion Corporation.
Unless otherwise indicated, all of the foregoing directors have served in
such capacity with PXRE since its organization in August 1999 and with its
predecessor, PXRE Delaware, since 1986.
In addition to Mr. Gerald Radke, we have the following executive officers:
Michael J. Bleisnick (50) is Executive Vice President -- London Market
Operations and has been an Executive Vice President of PXRE since March
1993. Prior thereto, he was a Senior Vice President of PXRE. From August
1993 until the Merger in December 1996, Mr. Bleisnick also served as an
Executive Vice President of TREX.
Bruce J. Byrnes (34) is the General Counsel and Secretary of PXRE
Delaware and PXRE Reinsurance Company. Prior to joining us in May, 2001,
Mr. Byrnes was an Associate of the law firm of Morgan, Lewis & Bockius LLP
from September, 1998, where he specialized in corporate and reinsurance
matters. Prior to that, Mr. Byrnes was an Associate of the law firm of
Baker & McKenzie, where he also specialized in corporate and reinsurance
matters.
James F. Dore (56) is Executive Vice President, Treasurer and Chief
Financial Officer of PXRE and has been such since June 1999. Prior to
joining us, Mr. Dore was Senior Vice President-Financial Market products
for Employers Reinsurance Corporation. Before assuming responsibility for
Financial Market Products, Mr. Dore was Chief Financial Officer of
Employers Reinsurance Corporation, prior to which he was Chief Financial
Officer of GE Capital Mortgage Corporation.
Gordon Forsyth, III (54) is Executive Vice President -- North American
Operations and Chief Underwriting Officer and has been an Executive Vice
President of PXRE since March 1993. Prior
9
thereto, he was a Senior Vice President of PXRE. From August 1993 until the
Merger in December 1996, Mr. Forsyth also served as an Executive Vice
President of TREX.
Jeffrey L. Radke (33) is Executive Vice President of PXRE and
President of PXRE Reinsurance Ltd. and has been such since November 1999.
Prior thereto, Mr. Radke served as President of Select Reinsurance Ltd.
From 1996 to 1998, he was Senior Vice President -- Capital Markets Products
of CAT Limited, prior to which he was a Vice President of Guy Carpenter &
Company, a reinsurance brokerage firm. Jeffrey Radke is Gerald Radke's son.
All of our executive officers hold office at the pleasure of the Board of
Directors.
The following table sets forth certain information concerning beneficial
ownership of our Shares by the directors, the five executive officers named
below under the heading "EXECUTIVE COMPENSATION" and all directors and executive
officers as a group, as of the Record Date:
SHARES (AND PERCENT) DIRECTOR
DIRECTORS AND FIVE CURRENT NAMED EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) TERM ENDS
--------------------------------------------------- --------------------- ---------
Gerald L. Radke...................................... 289,128(2) (4)
F. Sedgwick Browne................................... 29,975(3)* 2004
Bradley E. Cooper.................................... 0(3)* 2003
Robert W. Fiondella.................................. 36,873(3)* 2003
Susan S. Fleming..................................... 0(3)* 2003
Franklin D. Haftl.................................... 26,015(3)* (4)
Craig A. Huff........................................ 3,337,093(5) 2003
Halbert D. Lindquist................................. 5,325(3)* 2003
Wendy Luscombe....................................... 28,872(3)* (4)
Philip R. McLoughlin................................. 27,503(3)* 2003
Robert Stavis........................................ 63,735(6)* 2003
Michael J. Bleisnick................................. 103,252(7)* --
James F. Dore........................................ 64,963(7)* --
Gordon Forsyth, III.................................. 124,315(7)* --
Jeffrey L. Radke..................................... 73,347(7)* --
All directors and executive officers as a group (16
persons)........................................... 4,223,396(8)
---------------
* Beneficially owns less than 1% of the voting power attributable to our
issued and outstanding Common Shares and Preferred Shares.
(1) The number of Common Shares set forth opposite the names of Mr. Browne, Mr.
Cooper, Ms. Fleming, Mr. Haftl, Mr. Huff, Mr. Lindquist, Ms. Luscombe and
Mr. Stavis does not include the 2,000 shares granted to each such director
under the PXRE Director Deferred Stock Plan (described below under the
heading "THE BOARD OF DIRECTORS AND ITS COMMITTEES AND DIRECTOR
COMPENSATION"), as to which shares such directors held neither voting nor
investment power as of the Record Date. Pursuant to the terms of the
Director Deferred Stock Plan, on each date that dividends are paid to
shareholders in respect of the Common Shares, we make dividend equivalent
payments, in cash, in respect of each Common Share granted, but not yet
delivered, under such Plan.
(2) Mr. G. Radke beneficially owns 2.4% of our issued and outstanding Common
Shares. The number of Common Shares set forth opposite Mr. G. Radke's name
includes currently exercisable options to purchase 155,775 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, such
10
Common Shares for which Mr. G. Radke holds currently exercisable options
have been added to the total number of issued and outstanding Common Shares
solely for the purpose of calculating the percentage of such total number of
issued and outstanding Common Shares beneficially owned by Mr. G. Radke.
(3) Includes with respect to each of the following individuals, currently
exercisable options to purchase the indicated number of Common Shares: Mr.
Browne, 14,832 shares; Mr. Fiondella, 31,872 shares; Mr. Haftl, 23,380
shares; Mr. Lindquist, 4,325 shares; Ms. Luscombe, 26,722 shares; and Mr.
McLoughlin, 24,336 shares. In accordance with Rule 13d-3(d)(1) under the
Exchange Act, such Common Shares for which the named director holds
currently exercisable options have been added to the total number of issued
and outstanding Common Shares solely for the purpose of calculating the
percentage of such total number of issued and outstanding Common Shares
beneficially owned by such director. Also includes for Mr. Browne 3,028
Common Shares owned by his wife, as to which Mr. Browne disclaims beneficial
ownership.
(4) Term of office of Class I directors terminates at the forthcoming 2002
Annual Meeting.
(5) According to a Schedule 13D filed with the Commission, Reservoir Capital
Group reports shared dispositive and voting power with respect to 3,337,093
Common Shares, which Mr. Huff may be deemed to beneficially own by virtue of
his position as a Managing Member of Reservoir Management, which is the
Managing Member of Reservoir Capital Group. Mr. Huff disclaims beneficial
ownership as to all of these shares.
(6) In connection with closing of the Preferred Share Issuance on April 4, 2002,
Mr. Stavis acquired 66.667 C1 Preferred Shares and 33.333 C2 Preferred
Shares.
(7) Includes with respect to each of the following individuals, currently
exercisable options to purchase the indicated number of Common Shares: Mr.
Bleisnick, 75,728 shares; Mr. Dore, 33,750 shares; Mr. Forsyth, 78,094
shares; and Mr. J. Radke, 32,500 shares. In accordance with Rule 13d-3(d)(1)
under the Exchange Act, such Common Shares for which the named officer holds
currently exercisable options have been added to the total number of issued
and outstanding Common Shares solely for the purpose of calculating the
percentage of such total number of issued and outstanding Common Shares
beneficially owned by such officer.
(8) The directors and executive officers as a group beneficially own 20% of our
outstanding Common Shares. The number of shares includes currently
exercisable options to purchase 556,697 Common Shares. In accordance with
Rule 13d-3(d)(1) under the Exchange Act, such Common Shares for which our
directors and executive officers as a group hold currently exercisable
options have been added to the total number of issued and outstanding Common
Shares solely for the purpose of calculating the percentage of such total
number of issued and outstanding Common Shares beneficially owned by such
directors and executive officers as a group. The number also includes
3,337,096 Common Shares that Mr. Huff may be deemed to beneficially own by
virtue of his position as a Managing Member of Reservoir Management, which
is the Managing Member of Reservoir Capital Group, for which Mr. Huff
disclaims beneficial ownership.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
AND DIRECTOR COMPENSATION
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 2001, our Board of Directors met six (6) times. Other than Mr. David W.
Searfoss and Mr. Fiondella, no director attended fewer than 75% of the aggregate
of (i) the total number of Board meetings (held when such person was a director)
and (ii) the total number of meetings held by the standing committees on which
11
he or she served (during the periods that he or she served). Mr. Fiondella
attended 73% of the aggregate number of meetings of the Board and the committees
on which he served during 2001. Mr. Searfoss was physically disabled and retired
due to those disabilities effective April 4, 2002.
There are four standing committees of the Board of Directors: the Audit
Committee, the Human Resources Committee, the Investment Committee and the
Executive Committee. The committees are composed entirely of directors who are
not employees of PXRE, except for Mr. Gerald Radke who is a member of the
Executive Committee.
During 2001, the members of the Audit Committee were Messrs. Bernard Kelly
(Chairman), Browne, Haftl, McLoughlin and Searfoss. The members of the Audit
Committee are responsible for assisting the Board of Directors in fulfilling its
responsibilities in connection with our accounting and financial reporting
practices. Our Common Shares are listed on the NYSE and are governed by its
listing standards. The Board has determined that all members of the Audit
Committee are "independent" as that term is defined in the listing standards of
the NYSE. In 2001, the Audit Committee met four (4) times. Mr. Kelly, having
reached the mandatory retirement age, retired from the Board effective April 4,
2002.
During 2001, the members of the Human Resources Committee were Messrs.
Fiondella (Chairman), Haftl, Lindquist and Searfoss and Ms. Luscombe. The Human
Resources Committee performs the functions of a compensation committee,
including the administration of our various stock option and other compensation
plans. In 2001, the Human Resources Committee met four (4) times.
During 2001, the members of the Investment Committee were Ms. Luscombe
(Chairwoman) and Messrs. Browne, Kelly, Lindquist and McLoughlin. The members of
the Investment Committee are responsible for monitoring and approving the
investment policies and the investments of PXRE and our reinsurance and trading
subsidiaries, including PXRE Reinsurance Company ("PXRE Reinsurance") and PXRE
Reinsurance Ltd. ("PXRE Bermuda"), and for overseeing investment management,
which, during 2001, was carried out by Phoenix Investment Partners and by
Mariner Investment Group, Inc. In 2001, the Investment Committee met three (3)
times.
During 2001, members of the Executive Committee were Messrs. G. Radke,
Fiondella and Lindquist. The Executive Committee is vested with the authority to
exercise the powers of the full Board of Directors during the intervals between
its meetings. In 2001, the Executive Committee did not meet.
We do not have a standing nominating committee. However, upon the request
of the Board of Directors, the Executive Committee has occasionally functioned
in this role.
Notwithstanding anything to the contrary set forth in any of our previous
or future filings under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Report of the Audit Committee of our Board of Directors shall not be
incorporated by reference into any such filing.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF PXRE
The Audit Committee of the PXRE Board of Directors (the "Committee") is
composed of 5 independent directors and operates under a written charter adopted
by the Board of Directors. As of the date of this Report, the members of the
Committee are Bernard Kelly (Chairman), F. Sedgwick Browne, Franklin D. Haftl,
Philip R. McLoughlin and David W. Searfoss. The Committee recommends to the
Board of Directors (for the Board's recommendation to shareholders) the
selection of the Company's independent accountants.
12
Management is responsible for PXRE's financial reporting process, including
its system of internal control, and for the preparation of consolidated
financial statements in accordance with accounting principles generally accepted
in the United States. PXRE's independent accountants are responsible for
performing an independent audit of those consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America and to issue a report thereon. Our responsibility is to monitor and
review these processes. It is not our duty or our responsibility to conduct
auditing or accounting reviews or procedures. We are not employees of PXRE and
we may not be, and we may not represent ourselves to be or to serve as,
accountants or auditors by profession or experts in the fields of accounting or
auditing. Our oversight does not provide us with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, our considerations and discussions
with management and the independent accountants do not assure that PXRE's
financial statements are presented in accordance with generally accepted
accounting principles, that the audit of PXRE's financial statements has been
carried out in accordance with generally accepted auditing standards or that our
company's independent accountants are in fact "independent."
In this context, we have reviewed and discussed PXRE's consolidated
financial statements with management and the independent accountants. We have
relied, without independent verification, on management's representation that
the financial statements have been prepared with integrity and objectivity and
in conformity with accounting principles generally accepted in the United States
of America and on the representations of the independent accountants included in
their report on PXRE's financial statements. We discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees), as modified or supplemented.
PXRE's independent accountants also provided us with the written disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as modified or supplemented, and we
discussed with the independent accountants that firm's independence.
Based upon our discussions with management and the independent accountants
and our review of the representations of management and the report of the
independent accountants to the Committee, we recommended to the Board of
Directors that PXRE's audited consolidated financial statements be included in
PXRE's Annual Report on Form 10-K for the year ended December 31, 2001 for
filing with the Securities and Exchange Commission.
Dated: February 11, 2002
AUDIT COMMITTEE
Bernard Kelly (Chairman)
F. Sedgwick Browne
Franklin D. Haftl
Philip R. McLoughlin
David W. Searfoss
COMPENSATION OF DIRECTORS
CASH COMPENSATION. In 2001, non-employee directors received an annual
retainer of $25,000 (plus an additional $3,000 for Committee Chairpersons)
payable at the beginning of the year plus Board meeting fees of $1,800 per
meeting, and standing committee meeting fees of $1,500 per meeting. In
connection with the Preferred Share Issuance, the Board appointed a special
committee to review, evaluate and negotiate the
13
proposed transaction with Capital Z and Reservoir and other potential
transactions. The special committee consisted of Messrs. Fiondella, Kelly and
McLoughlin and Ms. Luscombe, each of whom received $20,000 for their service on
the special committee. During the 2001 fiscal year, we paid a total of $103,600
in directors' fees. See "Other Compensation" below.
OTHER COMPENSATION. Under the PXRE Director Equity and Deferred
Compensation Plan (the "Director Compensation Plan"), non-employee directors may
elect to defer receipt of the annual retainer and fees for services as a member
of the Board and such directors are allowed to elect, prior to the subject year,
to receive all or a portion of the annual retainer amount and the
fee-for-services amount, in our Common Shares or options to purchase our Common
Shares. Deferred amounts are credited with earnings (losses) mirroring the fund
or funds provided in our 401(k) Savings and Investments Plan (the "401(k) Plan")
that are designated by the director. The number of shares which may be awarded
to a director upon such director's election to receive Common Shares in lieu of
all or a portion of the annual retainer, and the fee-for-services amount, is the
number of whole shares equal to (i) the portion of the annual retainer, and the
fee-for-services amount, for which the director has made such election, divided
by (ii) the "fair market value" per Common Share, as determined pursuant to the
Director Compensation Plan.
The number of whole Common Shares subject to an option grant under the
Director Compensation Plan is determined by dividing the portion of the annual
retainer, and the fee-for-services amount, for which the director has made such
election by the "option value", as determined pursuant to the Director
Compensation Plan. The exercise price per share under each option is equal to
the "fair market value" per share, as determined pursuant to the Director
Compensation Plan. Options granted under the Director Compensation Plan are
immediately exercisable and may be exercised until the tenth anniversary of the
date of grant. In the event a director terminates service on the Board, such
person's options are exercisable for three years after the date of termination
of service, but not beyond the original expiration date. In the event of death
of a director after terminating service on the Board, any outstanding options
expire on the later of the date the director could have exercised the option at
the time the director terminated service or one year from the date of death,
provided that in no event may an option be exercised beyond its original
expiration date.
During the 2001 fiscal year, 1,813 Common Shares were awarded pursuant to
the Director Compensation Plan and options for 17,819 Common Shares at an
exercise price of $15.438, were granted pursuant to the Director Compensation
Plan to the directors who elected to receive options to purchase Common Shares.
The Director Compensation Plan is administered by the Board of Directors.
The Board has full power and authority to construe and interpret the Director
Compensation Plan and adopt and amend such rules and regulations for the
administration of the Director Compensation Plan as it deems desirable. The
Board may amend the Director Compensation Plan as it deems advisable, provided
that shareholder approval is required for any amendment to the Director
Compensation Plan which (i) materially increases the benefit accruing to
participants under the Director Compensation Plan, (ii) increases the number of
securities which may be issued under the Director Compensation Plan, or (iii)
materially modifies the requirements for participants in the Director
Compensation Plan. Additionally, no amendment may materially and adversely
affect any right of a director with respect to any option previously granted
without such director's written consent. The Board may terminate the Director
Compensation Plan at any time. If not earlier terminated by the Board, the
Director Compensation Plan will terminate immediately following the Annual
General Meeting of our shareholders in 2007.
Under the PXRE Director Stock Plan, as amended (the "Director Stock Plan"),
each non-employee director is automatically granted annually, on the date of our
Annual General Meeting, an option exercisable
14
(subject to a three-year vesting period) for the purchase of 5,000 Common Shares
at a price per share equal to the market value at the date of grant. In
addition, upon the termination of service on the Board by a non-employee
director as a result of disability (as determined by the Board) or retirement
upon or following attainment of age 72, which occurs six months following the
prior Annual General Meeting of Shareholders, the director will receive a fully
vested option exercisable for the purchase of 5,000 Common Shares on the last
day of service as a director at a price per share equal to the fair market value
at the date of grant. In the event a director terminates service on the Board by
reason of death, retirement or disability, the total number of option shares
will become immediately exercisable and will continue to be exercisable for
three years (but not beyond its original expiration date). In the event a
director terminates service on the Board other than by reason of death,
disability or retirement, such person's options (to the extent vested and
exercisable upon such termination) will be exercisable for three months after
the date of termination of service, but not beyond the original expiration date.
In the event of death of a director after terminating service on the Board, any
outstanding options will expire on the later of the date the director could have
exercised the option at the time the director terminated service or one year
from the date of death, provided that in no event may an option be exercised
beyond its original expiration date. No option may be repriced after the date of
grant (other than in connection with an adjustment in our Common Shares, as
provided in the Plan).
On the date of the Annual Meeting of shareholders in 1995 and 1996, options
for 1,000 shares were granted, pursuant to the Director Stock Plan, to each
non-employee director then in office at an exercise price of $23.25 and $24.95
respectively. On the date of the Annual Meetings of shareholders in 1997, 1998
and 1999, options for 3,000 shares, and on the date of the Annual Meeting of
shareholders in 2000 and 2001, options for 5,000 shares, were granted, pursuant
to the Director Stock Plan, to each non-employee director then in office at
exercise prices of $28.14, $31.11, $17.70, $14.79 and $17.40 respectively. On
April 4, 2002, Bernard Kelly and David Searfoss terminated their service on the
Board as a result of retirement and disability, respectively, and each
individual received a fully vested option to purchase 5,000 shares at $23.77. As
of the Record Date, options for a total of 176,000 shares had been granted
pursuant to the Director Stock Plan, of which a total of 124,250 are currently
exercisable.
Additionally, commencing in 2000, under the Director Stock Plan each
non-employee director is automatically granted annually, on the date of our
Annual General Meeting, 1,000 Common Shares subject to certain restrictions,
which restrictions lapse ratably over a period of 3 years from the date of grant
(other than in the case of a change of control, the Common Shares of PXRE
ceasing to be publicly traded or the death, disability or retirement of the
director, which will result in a lapse of the restriction). In addition, upon
the termination of service on the Board by a non-employee director as a result
of disability or retirement which occurs six months following the prior Annual
General Meeting of Shareholders, the director will receive 1,000 fully vested
Common Shares on the director's last day of service. On April 4, 2002, Bernard
Kelly and David Searfoss terminated their service on the Board as a result of
retirement and disability, respectively, and each individual received 1,000
fully vested Common Shares. As of the Record Date, 18,000 restricted shares had
been granted pursuant to the Director Stock Plan, 8,665 of which are currently
vested. Directors who are granted restricted Common Shares under the Director
Stock Plan are entitled to receive dividends on and to vote such shares during
the restricted period.
The Director Stock Plan is administered by the Board of Directors, which is
authorized to interpret the Director Stock Plan but has no authority with
respect to the selection of directors to receive options, the number of shares
subject to the Director Stock Plan or to each grant thereunder, or the option
price for shares subject to options. The Board may amend the Director Stock Plan
as it deems advisable but may not, without further approval of the shareholders,
increase the maximum number of shares under the Director Stock Plan
15
or options or restricted shares to be granted thereunder, change the option
price or price of the restricted shares provided in the Director Stock Plan,
extend the period during which options or restricted shares may be granted or
exercised, or change the class of persons eligible to receive options or
restricted shares.
Under the PXRE Director Deferred Stock Plan (the "Director Plan"), our
eligible non-employee directors upon becoming directors are each granted the
right to receive 2,000 Common Shares (subject to anti-dilution adjustments) at
certain specified times following their respective terminations as directors. As
of the Record Date, our eligible non-employee directors as a group have the
right to receive a total of 16,000 Common Shares pursuant to the terms of the
Director Plan.
On each date on which dividends are paid to holders of our Common Shares,
each director who has been granted the right to receive Common Shares under the
Director Plan is paid an amount in cash equal to the product of (i) the dividend
per share for the applicable dividend payment date and (ii) the number of shares
which have been granted to the director but which have not yet been delivered.
The Director Plan is administered by the Board of Directors, which may
amend or terminate the Director Plan at any time. However, no such amendment or
termination may reduce the number of shares that had been granted to the
directors prior to such amendment or termination.
REAPPOINTMENT OF INDEPENDENT ACCOUNTANTS
INDEPENDENT ACCOUNTANTS
The Board of Directors is recommending that the firm of KPMG be appointed
as our independent auditors for the fiscal year ending December 31, 2002. This
recommendation is being presented to the shareholders for their approval at the
Annual Meeting. KPMG has audited our financial statements since June 2001. A
representative of KPMG is expected to attend the Annual Meeting, with the
opportunity to make a statement if he or she so desires and to respond to
questions. Shareholders at the Annual Meeting will also be asked to vote to
refer the determination of the auditors' remuneration to the Board of Directors.
Prior to 2001, our auditor was PricewaterhouseCoopers.
PricewaterhouseCoopers notified us on March 12, 2001 that it declined to stand
for re-appointment as our auditor for fiscal year 2001. PricewaterhouseCoopers'
decision followed the recommendation of the Audit Committee of our Board of
Directors, and the Board of Directors' determination on February 13, 2001, to
conduct a review of auditing services and to invite PricewaterhouseCoopers, KPMG
and another firm of independent auditors to make proposals to the Board of
Directors for the provision of auditing services.
The reports of PricewaterhouseCoopers on our financial statements for the
fiscal years ended December 31, 2000 and 1999 were unqualified and contained no
adverse opinion or disclaimer of opinion and no such report was qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
two fiscal years and the interim period preceding PricewaterhouseCoopers'
election not to stand for re-appointment, we had no disagreements with
PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, and no events of
the nature required to be reported under Item 304(a)(1)(v) of Regulation S-K had
occurred.
The retention of KPMG was recommended by the Audit Committee of the Board
of Directors and approved by the Board of Directors on April 3, 2001. During the
two fiscal years prior to KPMG's appointment, we had no consultations with KPMG
concerning: (a) the application of accounting principles to a specific
transaction or the type of opinion that might be rendered on our financial
statements as to which a
16
written report was provided to us or as to which we received oral advice that
was an important factor in reaching a decision on any accounting, auditing or
financial reporting issue; or (b) any matter that was either the subject of a
disagreement or a reportable event within the meaning of Item 304(a)(1) of
Regulation S-K.
We filed a Form 8-K on March 16, 2001, reporting PricewaterhouseCoopers'
election not to stand for reappointment, and filed a Form 8-K/A on April 10,
2001, reporting the engagement of KPMG as our independent auditor subject to the
approval of our shareholders.
AUDIT FEES, FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES AND ALL
OTHER FEES
The aggregate fees for professional services rendered by KPMG for the audit
of our 2001 annual financial statement and the reviews of the financial
statements included in our Forms 10-Q for 2001 are estimated to be $688,000, of
which $609,000 have been billed through March 31, 2002. KPMG did not provide us
with any financial information systems design and implementation services during
2001. The aggregate fees for other professional services (principally comprising
tax services, audits of statutory statements of subsidiaries and due diligence
services) rendered by KPMG for us during 2001 are estimated to be $221,000, of
which $126,000 have been billed through March 31, 2002. The Audit Committee of
the Board of Directors considered whether the provision of such other services
is compatible with maintaining KPMG's independence.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE
APPOINTMENT OF KPMG AS INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2002 AND THE REFERRAL TO THE BOARD OF DIRECTORS OF THE
DETERMINATION OF THE ACCOUNTANTS' REMUNERATION.
17
EXECUTIVE COMPENSATION
The following tables and narrative text describe the compensation paid in
2001 and the two prior fiscal years to our Chief Executive Officer and our four
other most highly compensated executive officers. Also described below is
certain future compensation such individuals may be eligible to receive upon
retirement or following certain terminations of employment or certain changes of
control.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------- ----------------------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND BONUS OTHER ANNUAL STOCK STOCK COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($)(1) COMPENSATION(2) AWARDS($)(3) OPTIONS(#)(4) ($)(5)
------------------ ---- -------- ------- --------------- ------------ ------------- ------------
Gerald L. Radke..................... 2001 $520,000 -- $ 2,353 $187,200 91,000 $30,680
Chairman, President and 2000 519,100 -- 78,930 112,500 82,000 29,044
Chief Executive Officer 1999 494,000 $70,000 224,986 510,250 -- 28,014
Michael J. Bleisnick................ 2001 353,281 -- -- 99,000 75,000 24,200
Executive Vice President -- 2000 350,788 -- -- 62,500 50,000 24,821
London Market Operations 1999 348,095 25,000 -- 314,000 -- 24,065
James F. Dore(6).................... 2001 362,308 -- 3,616 198,000 75,000 24,430
Executive Vice President, 2000 321,471 -- 65,948 62,500 50,000 15,527
Treasurer and Chief 1999 182,418 33,000 23,055 278,400 -- 4,200
Financial Officer
Gordon Forsyth, III................. 2001 370,000 -- -- 99,000 95,000 25,700
Executive Vice President -- 2000 347,135 -- -- 62,500 50,000 23,207
North American Operations 1999 301,729 33,000 -- 255,125 7,977 22,048
and Chief Underwriter
Jeffrey L. Radke(7)................. 2001 361,104 -- 92,770 198,000 90,000 15,805
Executive Vice President 2000 275,000 -- 92,770 62,500 50,000 --
1999 17,190 -- -- -- -- --
---------------
(1) For 1999, consists of discretionary cash bonuses awarded in 2000 in respect
of fiscal year 1999.
(2) Consists of amounts paid to reimburse Mr. G. Radke for taxes paid by him (i)
in respect of the Bermuda reorganization and (ii) in respect of income he
may be treated as having received for income tax purposes relating to our
provision of Bermuda housing for Mr. G. Radke and to our reimbursement of
travel expenses incurred by Mr. G. Radke when traveling to Bermuda. With
respect to Mr. Dore, consists of amounts paid to reimburse Mr. Dore for
taxes paid by him in respect of income he may be treated as having received
for income tax purposes relating to our provision of Bermuda housing for Mr.
Dore and to our reimbursement of travel expenses incurred by Mr. Dore when
traveling to Bermuda. With respect to Mr. J. Radke, consists of amounts paid
to provide Bermuda housing for Mr. J. Radke.
(3) No restricted shares were awarded under our Restated Annual Incentive Bonus
Plan (the "Annual Bonus Plan") in respect of fiscal years 1999, 2000 or
2001. Includes awards to Messrs. G. Radke, J. Dore, M. Bleisnick, G. Forsyth
and J. Radke, respectively, in respect of fiscal year 1999 of 26,000,
15,000, 16,000, 13,000 and 12,500 restricted Common Shares, in respect of
fiscal year 2000 of 9,000, 5,000, 5,000, 5,000, and 5,000 restricted Common
Shares, and in respect of fiscal year 2001 of 9,000, 5,000, 10,000, 5,000
and 10,000 restricted Common Shares, in each case pursuant to our 1992
Officer Incentive Plan. Pursuant to the 1992 Officer Incentive Plan, such
restricted shares will vest in four equal annual
18
installments, with the final installment on February 11, 2005. During the
holding periods, such shares are entitled to receive dividends, if any,
declared with respect to our Common Shares. The aggregate holdings and
market value of restricted Common Shares held on December 31, 2001 by Mr. G.
Radke was 30,596 restricted shares with a market value of $539,713; by Mr.
Dore was 28,750 restricted shares with a market value of $507,150; by Mr.
Bleisnick was 17,814 restricted shares with a market value of $314,239; by
Mr. Forsyth was 16,314 restricted shares with a market value of $287,779;
and by Mr. J. Radke was 28,429 restricted shares with a market value of
$501,488.
(4) Consists of non-qualified options granted in respect of our Common Shares
pursuant to our 1992 Officer Incentive Plan.
(5) For Mr. G. Radke, consists of: $26,000, $25,730 and $24,700 that we
contributed in 2001, 2000 and 1999, respectively, to the 401(k) Plan (which
is a contributory defined contribution plan), $3,078, $1,712 and $1,712 paid
by us during each of 2001, 2000 and 1999 with respect to a supplemental term
life insurance policy for Mr. Radke's benefit and $1,602 paid by us during
each of 2001, 2000 and 1999 with respect to a supplemental disability
insurance policy for Mr. G. Radke's benefit. For Mr. Dore, consists of:
$17,230 and $8,327 that we contributed in 2001 and 2000 to the 401(k) Plan
and $7,200, $7,200 and $4,200 paid to Mr. Dore during 2001, 2000 and 1999
with respect to a car allowance. For Mr. Bleisnick, consists of: $17,000,
$17,621 and $16,865 that we contributed in 2001, 2000, and 1999,
respectively, to the 401(k) Plan and $7,200 paid by PXRE to Mr. Bleisnick
during 2001, 2000 and 1999 with respect to a car allowance. For Mr. Forsyth,
consists of: $18,500, $16,007 and $14,848 that we contributed in 2001, 2000
and 1999, respectively, to the 401(k) Plan and $7,200 paid by PXRE to Mr.
Forsyth during 2001, 2000 and 1999 with respect to a car allowance. For Mr.
J. Radke, consists of $15,805 that we contributed in 2001 to the 401(k)
Plan.
(6) Joined PXRE in June 1999.
(7) Joined PXRE in November 1999.
19
OPTION GRANTS IN LAST FISCAL YEAR
During 2001, 904,400 options were granted pursuant to our 1992 Officer
Incentive Plan.
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL YEAR PRICE ($/SH) DATE VALUE ($)(2)
---- -------------- ------------ ------------ ---------- ------------
Gerald L. Radke.................. 50,000 5.53% $19.80 02/12/2011 $509,550
41,000 4.53% $15.95 12/10/2011 $324,392
Michael J. Bleisnick............. 25,000 2.76% $19.80 02/12/2011 $254,775
50,000 5.53% $15.95 12/10/2011 $395,600
James F. Dore.................... 35,000 3.87% $19.80 02/12/2011 $356,685
40,000 4.42% $15.95 12/10/2011 $316,480
Gordon Forsyth, III.............. 35,000 3.87% $19.80 02/12/2011 $356,685
60,000 6.63% $15.95 12/10/2011 $474,720
Jeffrey L. Radke................. 30,000 3.32% $19.80 02/12/2011 $305,730
60,000 6.63% $15.95 12/10/2001 $474,720
---------------
(1) Consists of non-qualified options granted pursuant to our 1992 Officer
Incentive Plan. In 2001, two options grants were made pursuant to our 1992
Officers Incentive Plan to each of the Executive Officers listed in the
above table. The first was the annual grant made on February 12, 2001. The
second grant was made on December 10, 2001 as part of a retention package
approved by the Human Resources Committee of the Board of Directors in
response to significantly increased competition for officers with
underwriting and senior management experience caused by the formation of a
number of well capitalized Bermuda reinsurance startup companies in the wake
of the events of September 11, 2001. The exercise price of the options
listed in the above table is 100% of the fair market value of our Common
Shares on the dates of the respective grants. For this purpose, the fair
market value of a share of our Common Stock is the average of the high and
low prices per share quoted on the New York Stock Exchange on the dates of
grant. The options listed above become exercisable in four equal annual
installments, subject to the grantee remaining in the continuous employ of
PXRE or our affiliates for at least one year from the date of the grant,
except where such employment terminates by reason of death, permanent
disability or retirement at or after age 65 with our consent; provided,
however, that upon the earlier of (i) a change of control of PXRE or (ii)
our Common Shares ceasing to be publicly traded, any unexercised portion of
an option will become exercisable. Options may also be surrendered in
exchange for a cash payment in the event of a change of control of PXRE or
the cessation of public trading of our Common Shares, in each case under
certain circumstances. Options are not transferable by a grantee other then
by will or the laws of descent and distribution, and during the lifetime of
a grantee an option will be exercisable only by the grantee or, if the
grantee is legally incapacitated, by the grantee's duly appointed guardian
or legal representative. The 1992 Officer Incentive Plan authorizes the
administering committee to include in individual stock option agreements a
provision allowing grantees to satisfy any federal, state or local income
tax liabilities resulting from option exercises by having us withhold the
appropriate number of Common Shares at the time of exercise (subject in each
instance to committee approval).
(2) In accordance with the Commission's rules, in order to determine grant date
present values in the above table, we used the Black-Scholes model of option
valuation, adjusted to reflect an option term of 5 years, which represents
the weighted average (by number of options) over the past ten years of the
length of
20
time between the grant dates of options under our plans and their exercise
dates for the named executive officers. The model also assumes: (i) an
interest rate that represents the interest rate on a U.S. government zero
coupon bond with a maturity equal to the term of the grant; (ii) volatility
calculated using a weekly stock price for five years (260 weeks) prior to
the grant date; and (iii) dividends estimated at the annual rate of $0.24
per share. Based on this model, the present value of the options on the
February 12, 2001 and December 10, 2001 grant dates was determined to be
$10.191 and $7.912 respectively per option. We do not advocate or
necessarily agree that the Black-Scholes model can properly determine the
value of an option.
21
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT DECEMBER 31, 2001
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY STOCK
SHARES 12/31/01 OPTIONS AT 12/31/01
ACQUIRED ON VALUE (#)(2) ($)(3)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ------------------------- -------------------------
Gerald L. Radke............. 0 $ 0 118,990/156,285 $105,370/385,400
Michael J. Bleisnick........ 12,193 $84,104 54,984/114,494 $ 64,250/277,250
James F. Dore............... 0 $ 0 12,500/112,500 $ 64,250/260,350
Gordon Forsyth, III......... 7,000 $41,125 59,652/134,494 $ 96,735/294,150
Jeffrey L. Radke............ 0 $ 0 12,500/127,500 $ 64,250/294,150
---------------
(1) Represents the difference between the closing prices of our Common Shares as
reported on the New York Stock Exchange on the dates of exercise and the
exercise prices of the options.
(2) For Mr. G. Radke, consists of options for 275,275 Common Shares granted in
1993-2001 pursuant to our 1992 Officer Incentive Plan at exercise prices
ranging from $12.50 to $32.938 per share, 118,990 of which options were
exercisable at December 31, 2001. For Mr. Bleisnick, consists of options for
169,478 Common Shares granted in 1993-2001 pursuant to our 1992 Officer
Incentive Plan at exercise prices ranging from $12.50 to $32.938 per share,
54,984 of which options were exercisable at December 31, 2001. For Mr. Dore,
consists of options for 125,000 Common Shares granted in 2000 and 2001
pursuant to our 1992 Officer Incentive Plan at exercise prices ranging from
$12.50 to $19.80 per share, 12,500 of which options were exercisable at
December 31, 2001. For Mr. Forsyth, consists of options for 4,802 Common
Shares granted in 1992 pursuant to our 1988 Stock Option Plan at an exercise
price of $10.875 per share, all of which options were exercisable at
December 31, 2001, and options for 189,344 Common Shares granted in
1993-2001 pursuant to our 1992 Officer Incentive Plan at exercise prices
ranging from $12.50 to $32.938 per share, 54,850 of which options were
exercisable at December 31, 2001. For Mr. J. Radke, consists of options for
140,000 Common Shares granted pursuant to our 1992 Officer Incentive Plan at
exercise prices ranging from $12.50 to $19.80 per share, 12,500 of which
options were exercisable at December 31, 2001.
(3) Represents the difference between the closing price of our Common Shares as
reported on the New York Stock Exchange on December 31, 2001 ($17.64) and
the exercise prices of the options.
22
PENSION PLAN
The following table indicates estimated total annual benefits payable under
the PXRE Reinsurance Company Retirement Plan (the "Retirement Plan") and the
Supplemental Executive Retirement Plan, and the 401(k) Plan (which are
attributable to a previously frozen defined contribution plan) as a Life Annuity
upon retirement at age 62 in 2001, to persons in specified final average
compensation and years of service classifications.
YEARS OF SERVICE
----------------------------------------------------
AVERAGE ANNUAL EARNINGS 5 10 15 20 25
----------------------- -------- -------- -------- -------- --------
$125,000.................................... $ 16,667 $ 33,333 $ 50,000 $ 50,000 $ 61,723
150,000.................................... 20,000 40,000 60,000 60,128 75,160
175,000.................................... 23,333 46,667 70,000 70,878 88,598
200,000.................................... 26,667 53,333 80,000 81,628 102,035
225,000.................................... 30,000 60,000 90,000 92,378 115,473
250,000.................................... 33,333 66,667 100,000 103,128 128,910
275,000.................................... 36,667 73,333 110,000 113,878 142,348
300,000.................................... 40,000 80,000 120,000 124,628 155,785
400,000.................................... 53,333 106,667 160,000 167,628 209,535
500,000.................................... 66,667 133,333 200,000 210,628 263,285
600,000.................................... 80,000 160,000 240,000 253,628 317,035
700,000.................................... 93,333 186,667 280,000 296,628 371,785
800,000.................................... 106,667 213,333 320,000 339,628 424,535
900,000.................................... 120,000 240,000 360,000 382,628 478,285
These benefits include benefits that may be payable from the Retirement
Plan, the Supplemental Executive Retirement Plan and the 401(k) Plan (which are
attributable to a previously frozen defined contribution plan). The benefits in
the above table are not subject to any deduction for Social Security or other
offset amounts.
For each of the named current executive officers, annual covered
compensation for 2001 is as follows: Mr. G. Radke -- $709,128; Mr.
Bleisnick -- $429,526; Mr. Forsyth -- $434,941; Mr. Dore -- $357,462; and Mr. J.
Radke -- $295,552. Annual covered compensation consists of base salary (as shown
in the "Salary" column of the Summary Compensation Table) and the average amount
of bonuses paid (including the value of the portion of bonuses paid in shares of
restricted stock) over the preceding 10 years (or shorter period of employment),
provided that with respect to Mr. G. Radke, it is the average bonus paid over 10
years out of the preceding 11 years in which bonuses were the greatest, ignoring
any years prior to 1991. The full years of credited service for each of the
named current officers is as follows: Mr. G. Radke -- 25, Mr. Bleisnick -- 17,
Mr. Forsyth -- 15, Mr. Dore -- 2, and Mr. J. Radke -- 2.
23
STOCK PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of our previous
or future filings under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Stock Performance Graph and Report of the Human Resources Committee of our Board
of Directors shall not be incorporated by reference into any such filings.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PXRE GROUP LTD, S&P 500 AND
DOW JONES PROPERTY AND CASUALTY INDEX
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
--------------------------------------------------------------------------------
PXRE GROUP LTD 100 137 108 59 77 82
S&P 500 100 133 171 208 189 166
Dow Jones P&C 100 141 134 100 162 156
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1996. For each subsequent year, our
total return and the total return for each index is stated as of December 31 of
such year.
24
REPORT OF THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS OF PXRE
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation:
PXRE Group Ltd. (the "Company") has implemented compensation policies,
plans and programs which seek to increase the profitability of the Company, and
thus shareholder value, by aligning closely the financial interests of the
Company's executives with those of its shareholders. Emphasis is placed on the
achievements of the Company as an integrated unit.
The Human Resources Committee of the Company has established an executive
compensation program to achieve the following goals:
1. To attract and retain key executives critical to the long-term
success of the Company.
2. To promote the enhancement of shareholder value.
3. To reward executives for long-term strategic management.
4. To support a performance-oriented environment resulting in above
average total compensation for above average Company results.
COMPENSATION MIX
The Company's executive compensation program consists of three components
(base salary, annual incentives and long-term incentives) designed to promote
the above-stated goals.
BASE SALARY
Base Salary is targeted at the competitive median for competitors in the
reinsurance industry. For the purpose of establishing base salary levels, the
Company from time to time compares the levels of executive base salary paid by
it to those levels paid to executives of other public reinsurance companies in
the United States and Bermuda.
Executive salaries are reviewed by the Committee in the first quarter of
each year. The Chief Executive Officer submits an annual salary plan to the
Committee and the Committee reviews the plan and determines any appropriate
modifications. Any increases in an individual executive's salary from year to
year are based on (1) increased contribution to the Company by the individual
and (2) increases in median competitive pay levels. Based upon these factors, in
2001 the Committee determined that it was appropriate to increase executive base
salaries by an average of 7.62%.
ANNUAL INCENTIVES
The Restated Employee Annual Incentive Bonus Plan, adopted by the Company
in 1992 and amended in 1994, 1997 and 2000, is intended to reflect the Company's
belief that management's contribution to shareholder returns comes from
maximizing earnings at an appropriate level of risk across the reinsurance
cycle. Annual target bonuses are determined for each eligible employee, and
following the end of each year the Committee determines to what extent each
employee's target bonus for the year has been earned. The full target bonus will
be paid to the employee if the Company achieved a 13% after-tax return on equity
for the year. The bonus award payable in any year will be adjusted up to 150% or
down to 0% of the target bonus based on the actual return on equity achieved by
the Company for the year.
25
Pursuant to the Annual Bonus Plan, the bonus award for all officers is
payable 70% in cash and 30% in restricted Common Shares, at the current market
value. The partial payment in restricted Common Shares ties a portion of each
executive's annual incentive award to the Company's share price over time.
Employees who are not officers of the Company receive the entire bonus award in
cash. The Committee may adjust the cash portion of any bonus award (plus or
minus 20% for officers, 40% for non-officers) to reflect individual performance.
The maximum cash and restricted stock bonus awards that a participant who is a
covered employee at the end of the year may receive is $1 million.
Commencing with awards for 1996, awards to officers who are tax residents
of Belgium (or other countries) that tax restricted stock awards in the year
received (rather than in the year that the restrictions lapse) are made in cash
units credited to an unfunded account. The units vest at the same time that
restricted stock awards vest, and are paid to the officer in cash. No earnings
or losses (other than fluctuations in the PXRE stock price) are credited to the
account.
In February 2002, the Committee determined no bonus was payable to the
Company's executive officers under the Annual Bonus Plan based on the 2001
performance of the Company. Nevertheless, upon the recommendation of management
that to attract and retain key performers even in years with poor results it was
necessary to pay reasonable bonus amounts to non-executive officers and
employees, the Committee determined to grant discretionary bonus amounts
aggregating approximately $233,000 outside of the Annual Bonus Plan.
LONG-TERM INCENTIVES
In March 1992, the Committee made its final awards under the Company's 1988
Stock Option Plan, which was effectively "frozen" by the Board of Directors as
of December 31, 1992 so that no further options could thereafter be granted
under such Plan. In May 1992, the shareholders of the Company approved the 1992
Senior Executive Incentive Plan, which provided for grants of long-term
incentive awards to senior executives of the Company. The Plan was amended in
1994 by vote of the shareholders of the Company to allow the grant of long-term
incentive awards to any Officer of the Company, and the name of the Plan was
changed to 1992 Officer Incentive Plan to recognize the broader base of
participants. The 1992 Officer Incentive Plan provides the Committee with the
flexibility to grant long-term incentives in two forms: stock options and
restricted stock.
Each year, the Committee will determine whether it is appropriate to grant
stock option and/or restricted stock awards to eligible officers. Grants for
each officer are determined based on industry norms, with the Committee having
the flexibility to adjust individual awards. Awards are considered in
conjunction with the annual salary plan and the overall goals of the Company's
executive compensation program. The Committee believes that its past option
grants under the 1988 Stock Option Plan have focused, and its option and
restricted stock grants under the 1992 Officer Incentive Plan will continue to
focus, management's attention on building shareholder value.
The Committee granted non-qualified options to purchase a total of 443,400
Common Shares at an exercise price of $19.80 per share (market value on grant
date) in February of 2001 to the Company's officers pursuant to the 1992 Officer
Incentive Plan. Such grants were made pursuant to the Committee's evaluation of
each grantee's base salary and position with the Company, the fair market value
of the Common Shares at the date of grant and competitive compensation levels
within the industry. The Committee granted non-qualified options to purchase a
total of 461,000 Common Shares at an exercise price of $15.95 per share (market
value on grant date) in December of 2001 to the Company's officers pursuant to
the 1992 Officer
26
Incentive Plan. Such grants were made as part of a retention package approved by
the Committee in December in response to significantly increased competition for
officers with underwriting and senior management experience caused by the
formation of a number of well capitalized Bermuda reinsurance start up companies
in the wake of the events of September 11, 2001. Grants with respect to 102,800
shares of restricted stock were made during or with respect to 2001 under the
1992 Officer Incentive Plan.
The Internal Revenue Code has set limitations on the deductibility of
compensation paid to a public company's five most highly paid compensated
executive officers. Provided that other compensation objectives are met, it is
the Committee's intention that executive compensation be deductible for federal
income tax purposes. Accordingly, to comply with regulations regarding the
deductibility of executive compensation expense, the Restated Employee Annual
Incentive Bonus Plan and the 1992 Officer Incentive Plan were amended in 1997.
The 1992 Officer Incentive Plan expires in 2002. A new 2002 Officer
Incentive Plan, which does not differ materially from the 1992 Officer Incentive
Plan, is being submitted to shareholders for their approval at the Company's
Annual General Meeting on May 30, 2002.
CHIEF EXECUTIVE COMPENSATION
The Committee determined the Chief Executive Officer's compensation for
2001 based upon a number of factors and criteria. The Chief Executive Officer's
base salary was not increased during 2001, based upon a review of similar
companies adjusted for size and capitalization and upon review of the Chief
Executive Officer's performance as regards the achievement of long-term
strategic goals and the management of the Company.
In February of 2001, the Chief Executive Officer received options to
purchase a total of 50,000 Common Shares at an exercise price of $19.80 per
share (market value on grant date) under the 1992 Officer Incentive Plan. He
also received a restricted share grant of 9,000 Common Shares under the 1992
Officer Incentive Plan. As discussed above, such grant was determined pursuant
to the Committee's evaluation of the Chief Executive Officer's base salary and
position with the Company, the fair market value of the Common Stock on the date
of grant and competitive CEO compensation levels within the industry.
In December of 2001, the Committee approved a retention package for certain
officers of the Company and its affiliates in response to significantly
increased competition for officers with underwriting and senior management
experience caused by the formation of a number of well capitalized Bermuda
reinsurance start up companies in the wake of the events of September 11, 2001.
In connection with this retention package, the Chief Executive Officer received
options to purchase a total of 41,000 Common Shares at an exercise price of
$15.95 per share (market value on grant date) under the 1992 Officer Incentive
Plan. Pursuant to a letter agreement, dated as of December 12, 2001, the Company
agreed to pay the Chief Executive Officer a retention bonus of $260,000, which
is payable in installments of $130,000 on January 31, 2002 and $130,000
27
on January 31, 2003. The payment of each such portion of the retention bonus is
contingent on the Chief Executive Officer continuing to be in the Company's
employ on the respective bonus payment dates.
February 11, 2002
HUMAN RESOURCES COMMITTEE
Robert W. Fiondella (Chairman)
Wendy Luscombe
Philip R. McLoughlin
David W. Searfoss
Halbert D. Lindquist
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the five members of the Human Resources Committee during 2001, Mr.
Fiondella and Mr. Searfoss are executive officers and directors of Phoenix Home
Life. As of the Record Date, Phoenix Home Life owned approximately 9.5% of our
issued and outstanding Common Shares. During 2001, we and our various
subsidiaries were parties to investment advisory agreements with Phoenix
Investment Partners, a subsidiary of Phoenix Home Life. Pursuant to these
agreements, which are terminable by either party on 60 days' notice, Phoenix
Investment Partners provides, or arranges for another party to provide,
investment research and advice, implementation of investment transactions,
clearing agent and custodian services, monthly reports on portfolio transactions
and other related services. The amount of investment advisory fees payable
pursuant to such agreements generally is equal to 0.15% of average assets under
management plus out-of-pocket expenses. We and our subsidiaries incurred fees of
approximately $332,000 to Phoenix Investment Partners for services performed in
fiscal year 2001. We believe that the terms of the investment advisory
agreements described above are no less favorable to us and our affiliates than
terms available for comparable services from unaffiliated persons.
TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
EXECUTIVE SEVERANCE PLAN. In 1989, the Board of Directors approved an
Executive Severance Plan for designated officers of PXRE, which has been renewed
for an additional five year term to and including August 31, 2004.
The Executive Severance Plan provides to designated officers certain
benefits in the event of termination without cause or constructive discharge
within 6 months before a "Change of Control" (as defined in the Executive
Severance Plan) or within one year thereafter (two years for Mr. G. Radke). The
Executive Severance Plan provides that a "Change of Control" will be deemed to
have occurred if (i) any person (as defined in the Executive Severance Plan)
other than PXRE or Phoenix Home Life or its affiliates becomes the beneficial
owner, directly or indirectly, of securities representing 30% or more of the
combined voting power of our outstanding securities; (ii) our shareholders
approve a merger or consolidation of PXRE with another corporation (other than
certain situations where our shareholders before such transaction continue in
control after such transaction) or a sale or other disposition of all or
substantially all of our assets; (iii) our shareholders approve a plan of
liquidation or dissolution of PXRE; or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted our Board of
Directors and any new director whose election was approved by at least
two-thirds of the directors who were directors at the beginning of the period or
whose election had previously been so approved, cease to constitute a majority
of the Board. The participants in the Executive Severance Plan have agreed that
consummation of the Preferred
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Share Issuance would not give such participants the right to trigger severance
entitlements by voluntarily resigning on account of constructive discharge.
The benefits consist of a lump sum cash payment equal to (i) one year's
salary (for Mr. Gerald Radke two years if terminated within 12 months of a
change of control), (ii) accrued but unpaid bonuses, (iii) present value of
employer contributions to our Pension Plan and the 401(k) Plan (the "Qualified
Plans") for one year (two years for Mr. G. Radke if terminated within 12 months
of a change of control), and (iv) amounts forfeited under the Qualified Plans on
termination of employment, reduced by the present value of payments under any
employment agreement, Company policy or statute. In addition, one year's
coverage (two years for Mr. G. Radke) is provided to the officer under our
medical, life and other welfare benefit plans in which the officer participated.
In determining these benefits, the one and two year periods do not extend past
age 65.
We also indemnify the officer for any excess parachute payment excise tax
(and the excise and income tax on such indemnity) for which the officer may
become responsible, as well as attorney's fees required to enforce such
officer's rights under the Plan.
The Executive Severance Plan has a five year term subject to renewal only
if the Board of Directors determines prior to the end of such term (or the end
of any subsequent renewal term) that the Plan shall be renewed; the Plan
continues in the event of a change of control until all obligations are
satisfied.
Messrs. G. Radke, Dore, Bleisnick, Forsyth and J. Radke participate in the
Executive Severance Plan, with 23 others. Were a change of control of PXRE to
have occurred on December 31, 2001 and if our employment of the named executive
officers had then been terminated as provided in the Executive Severance Plan,
it is estimated that the compensation payable to Messrs. G. Radke, Dore,
Bleisnick, Forsyth and J. Radke would have been $1,040,000, $360,000, $340,000,
$370,000 and $390,000, respectively.
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN. Adopted in 1992, the
Restated Employee Annual Incentive Bonus Plan, as amended (the "Annual Bonus
Plan"), provides for annual employee incentive awards comprised of cash and, in
the case of senior and junior executives, restricted Common Shares ("Restricted
Shares"). More specifically, the Annual Bonus Plan (i) links the funding of the
annual bonus pool for all participating employees to our "return on equity"
(defined in the Annual Bonus Plan as our consolidated net income for the fiscal
year divided by our average stockholders' equity for such fiscal year); and (ii)
provides the Annual Bonus Plan Committee (which administers the Annual Bonus
Plan) with the discretion to adjust the final annual bonus pool amount for
allocation to participants by up to plus or minus 25% of such pool. Subject to
certain adjustments as provided in the Annual Bonus Plan, a maximum of 350,000
Common Shares has been reserved for awards of Restricted Shares under the Annual
Bonus Plan. Authorized and unissued shares may be used for grants of Restricted
Shares under the Annual Bonus Plan.
Restricted Share awards consist of grants of Common Shares, which are
generally subject to forfeiture if the recipient's employment with us terminates
during the restricted period specified in the award. Subject to the discretion
of the Annual Bonus Plan Committee, the period must be at least three years,
measured as provided in the Annual Bonus Plan (the "Restricted Period"). The
recipient of a Restricted Share award is entitled to all the rights of a
shareholder with regard to the awarded Restricted Shares during the Restricted
Period, including the right to receive dividends on, and to vote, the Restricted
Shares, except that the Restricted Shares may not be sold, pledged or otherwise
transferred by the recipient until the applicable Restricted Period has lapsed.
The lapse of the Restricted Period may be accelerated in the event of a
recipient's death, permanent disability or retirement, as determined by the
Annual Bonus Plan Committee. The Annual Bonus Plan Committee requires a
participant receiving an award of Restricted Shares to enter
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into a Restricted Share Agreement with us containing the foregoing restrictions
and such other terms as the Annual Bonus Plan Committee may deem advisable.
Upon the earlier of a Change of Control or our shares ceasing to be
publicly traded, any remaining Restricted Period applicable to Restricted Shares
will immediately lapse. The definition of a "Change of Control" is the same as
the definition in the Executive Severance Plan as described above. The
participants in the Annual Bonus Plan have agreed that the Preferred Share
Issuance, in of itself, will not cause the Restricted Period to lapse.
Messrs. G. Radke, Dore, Bleisnick, Forsyth and J. Radke are each eligible
to participate in the Annual Bonus Plan. No Restricted Share and cash bonus
awards under the Annual Bonus Plan were made to Messrs. Gerald Radke, Dore,
Bleisnick, Forsyth and J. Radke in respect of fiscal year 2001. Restricted Share
and cash bonus awards under the Annual Bonus Plan, and discretionary cash
bonuses outside of the Restricted Bonus Plan, were made in prior years to
certain of those individuals, as noted in the Summary Compensation Table above.
1992 OFFICER INCENTIVE PLAN. Adopted in 1992, the 1992 Officer Incentive
Plan, as amended (the "1992 Officer Incentive Plan") provides for both grants of
options and awards of Restricted Shares to officers of PXRE or our affiliates.
More specifically, the 1992 Officer Incentive Plan provides for the grant of
incentive stock options (the "Incentive Stock Options") which are intended to
qualify as incentive stock options under Section 422 of the Code, non-qualified
stock options which are not intended to qualify as incentive stock options under
the Code ("Non-Qualified Options"), and awards of Restricted Shares, as
determined by the Incentive Plan Committee, which administers the 1992 Officer
Incentive Plan. Subject to certain adjustments as provided in the 1992 Officer
Incentive Plan, a maximum of 2,750,000 PXRE Common Shares has been reserved for
issuance upon the exercise of options and grants of Restricted Shares under the
1992 Officer Incentive Plan.
The 1992 Officer Incentive Plan terminates on May 21, 2002. The Board has
adopted, subject to shareholder approval at the May 30, 2002 Annual Meeting of
the Shareholders, the 2002 Officer Incentive Plan to replace the 1992 Officer
Incentive Plan. The terms and provisions of the 2002 Officer Incentive Plan are
substantially similar to those in the 1992 Officer Incentive Plan.
All options and Restricted Share awards are evidenced by agreements (the
"Stock Option Agreements" and the "Restricted Share Agreements", respectively)
with the terms and conditions set forth in the 1992 Officer Incentive Plan and
such other terms and conditions as the 1992 Incentive Plan Committee determines.
Options must be granted within ten years of the adoption of the 1992
Officer Incentive Plan. Options have a term not to exceed ten years. The
exercise price for Incentive Stock Options and Non-Qualified Options must be
equal to or exceed the fair market value of the Common Shares on the date the
option is granted. Option granted under the 1992 Officer Incentive Plan cannot
be repriced (other than in connection with an adjustment of our Common Shares).
Subject to the 1992 Incentive Plan Committee's discretion, no part of any
option may be exercised unless the optionee remains in the continuous employ of
us or our affiliates for at least one year from the date of grant of the option,
except where such employment terminates by reason of death, permanent disability
or retirement with our consent.
No options are transferable by an optionee other than by will or the laws
of descent and distribution, and during the lifetime of an optionee an option is
exercisable only by the optionee or, if the optionee is legally incapacitated,
by the optionee's duly appointed guardian or legal representative.
30
The 1992 Officer Incentive Plan provides that the restricted period for all
Restricted Shares is subject to the 1992 Incentive Plan Committee's discretion,
but in no event will be less than three years (the "Restricted Period"). The
lapse of the Restricted Period may be accelerated in the event of a recipient's
death, permanent disability or retirement, as determined by the 1992 Incentive
Plan Committee. Restricted Shares are generally subject to forfeiture if the
recipient's employment with us terminates during the Restricted Period. The
recipient of a Restricted Share award is entitled to all the rights of a
shareholder with regard to the awarded Restricted Shares during the Restricted
Period, including the right to receive dividends on, and to vote, the Restricted
Shares, except that the Restricted Shares may not be sold, pledged or otherwise
transferred by the recipient until the applicable Restricted Period has lapsed.
The 1992 Officer Incentive Plan provides that upon the earlier of (i) a
Change of Control of PXRE or (ii) our Common Shares ceasing to be publicly
traded, any unexercised portion of an option shall become exercisable and any
Restricted Period applicable to Restricted Shares shall immediately lapse. The
1992 Officer Incentive Plan incorporates the same definition of "Change of
Control" as that contained in the Executive Severance Plan, as described above.
The participants in the 1992 Officer Incentive Plan have agreed that the
Preferred Share Issuance, in of itself, will not cause options to become
exercisable or cause the Restricted Period as to Restricted Shares to lapse.
The 1992 Incentive Plan Committee may grant certain optionees for up to 60
days following a Change of Control or up to 60 days following the cessation of
the right to elect to surrender all or part of his or her option and to receive
a cash payment equal to the greater of (a) the excess of the fair market value
of the option shares surrendered over the exercise price for such shares, or (b)
except for Incentive Stock Options, the excess of the per share net worth (as
determined under the 1992 Officer Incentive Plan) of the shares to which the
surrendered option pertains on the date of surrender over the per share net
worth of such shares on the date the option was granted.
The 1992 Officer Incentive Plan also provides that if an optionee does not
make an election under either of the above provisions on or before the 60th day
following a Change of Control resulting from certain mergers and consolidations,
the sale of all or substantially all of our assets, our liquidation or
dissolution, or such cessation of public trading, the optionee will be deemed to
have made such election as of such 60th day and the optionee will receive the
cash payment that would be due upon such an election and the optionee's option
and surrender rights will be deemed to have been canceled.
Messrs. G. Radke, Dore, Bleisnick, Forsyth and J. Radke are each eligible
to participate in the 1992 Officer Incentive Plan. In February 2001, Restricted
Share awards were granted under the Plan to Messrs. G. Radke, Dore, Bleisnick,
Forsyth and J. Radke in respect of fiscal year 2001, as noted in the Summary
Compensation Table above. Non-qualified options were also granted in prior years
under the Plan to Messrs. G. Radke, Dore, Bleisnick, Forsyth and J. Radke.
APPROVAL OF ADOPTION OF
THE 2002 OFFICER INCENTIVE PLAN
On February 11, 2002, subject to shareholder approval, the Board adopted
the PXRE Group Ltd. 2002 Officer Incentive Plan (the "2002 Officer Incentive
Plan"), under which 1,000,000 Common Shares would be reserved for issuance
pursuant to grants of restricted stock or upon exercise of options granted under
the 2002 Officer Incentive Plan.
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The Board believes that the equity-based incentive awards that would be
available under the 2002 Officer Incentive Plan links the interests of eligible
employees more closely with the interests of our shareholders. The Board further
believes that these awards are key aspects of our compensation programs which
are designed to attract, retain and motivate the best possible employees to
accomplish our business objectives.
We are seeking shareholder approval of the 2002 Officer Incentive Plan in
order to comply with the requirements of Sections 162(m) and 422 of the Code and
the requirements of the New York Stock Exchange.
The following is a description of the principal features of the 2002
Officer Incentive Plan for which shareholder approval is being sought hereby.
Such description is qualified in its entirety by reference to the terms of the
2002 Officer Incentive Plan, a complete copy of which is attached as Appendix A.
2002 OFFICER INCENTIVE PLAN. The 2002 Officer Incentive Plan provides for
the grant of incentive stock options ("Incentive Stock Options") which are
intended to qualify as incentive stock options under Section 422 of the Code,
non qualified stock options which are not intended to qualify as incentive stock
options under the Code ("Non-Qualified Options"), and awards of Common Shares
subject to certain restrictions ("Restricted Shares"), as determined by the
administering committee. Subject to certain adjustments as provided in the 2002
Officer Incentive Plan and described below, a maximum of 1,000,000 Common Shares
is reserved for issuance upon the exercise of options and grants of Restricted
Shares under the 2002 Officer Incentive Plan, plus any option terminating or
expiring for any reason prior to its exercise in full, or any Restricted Shares
which are forfeited under the 1992 Officer Incentive Plan, up to a maximum of
1,555,691. Authorized but unissued shares may be used for grants of options or
Restricted Shares under the 2002 Officer Incentive Plan.
ADMINISTRATION OF THE 2002 OFFICER INCENTIVE PLAN. The 2002 Officer
Incentive Plan is administered by a committee (the "Incentive Plan Committee")
whose members are appointed by the Board of Directors and are "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act and are
"outside directors" within the meaning of Section 162(m) of the Exchange Act.
Subject to the provisions of the 2002 Officer Incentive Plan, the Incentive Plan
Committee has sole and complete authority (a) to determine, in its discretion,
the individuals to whom, and the times at which, options or Restricted Shares
will be granted (such individuals being referred to collectively herein as
"Grantees"), the number of shares in each Restricted Share award or subject to
each option and the provisions of the option agreements and restricted share
agreements evidencing such options or relating to such Restricted Shares, (b) to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the operation of the 2002 Officer Incentive Plan as the Incentive Plan
Committee shall, from time to time, deem advisable, (c) to interpret the terms
and provisions of the 2002 Officer Incentive Plan, and (d) to correct any
defect, supply any omission or reconcile any inconsistency in the 2002 Officer
Incentive Plan. The Board of Directors may fill any Incentive Plan Committee
vacancy and remove any member at any time with or without cause, provided,
however, that each such replacement must be a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act and an "outside director" within
the meaning of Section 162(m) of the Code, and that the Incentive Plan Committee
must at all times consist of at least two members.
All options and Restricted Share awards will be evidenced by agreements
("Stock Option Agreements" and "Restricted Share Agreements," respectively) with
the terms and conditions set forth in the 2002 Officer Incentive Plan and such
other terms and conditions as the Incentive Plan Committee shall determine.
ELIGIBILITY. All officers of PXRE or any affiliate, as selected by the
Incentive Plan Committee, are eligible to be Grantees under the 2002 Officer
Incentive Plan. The 2002 Officer Incentive Plan contemplates
32
that options and/or Restricted Shares will be granted no more frequently than
annually to eligible individuals, in the sole discretion of the Committee.
As of the Record Date, of our approximately 59 salaried non-temporary
employees, 28 were eligible to be Grantees under the 2002 Officer Incentive
Plan.
TERMS OF OPTIONS. Options will have a term not to exceed ten years. The
exercise price for both Incentive Stock Options and Non-Qualified Options must
be equal to or exceed the fair market value of the Common Shares on the date the
option is granted. Subject to the Incentive Plan Committee's discretion, no part
of any option may be exercised unless the Grantee remains in the continuous
employ of PXRE or our affiliates for at least one year from the date of grant of
the option, except where such employment terminates by reason of death,
permanent disability or retirement with our consent. No options will be
transferable by a Grantee other than by will or the laws of descent and
distribution, and during the lifetime of a Grantee an option will be exercisable
only by the Grantee or, if the Grantee is legally incapacitated, by the
Grantee's duly appointed guardian or legal representative. No repricing of
outstanding options shall be permissible (other than in connection with an
adjustment in the Common Shares, as provided in the 2002 Officer Incentive
Plan).
TERMS OF RESTRICTED SHARES. The Incentive Plan Committee may make awards
of Restricted Shares as it may determine, subject to the 2002 Officer Incentive
Plan. Restricted Shares are generally subject to forfeiture if the recipient's
employment with us terminates during the restricted period determined by the
Incentive Plan Committee to be applicable to the award (the "Restricted
Period"). The term of the Restricted Period is subject to the discretion of the
Incentive Plan Committee, but in no event will be less than three (3) years,
with ratable vesting during the Restricted Period (other than in the case of a
Change in Control, our Common Shares ceasing to be publicly traded, or the
death, disability or retirement of a participant). The grantee of a Restricted
Share award is entitled to all the rights of a shareholder with regard to the
awarded Restricted Shares during the Restricted Period, including the right to
receive dividends on and to vote the Restricted Shares, except that the
Restricted Shares may not be sold, pledged or otherwise transferred by the
Grantee until the applicable Restricted Period has lapsed. The lapse of the
Restricted Period may be accelerated in the event of a recipient's death,
disability or retirement, in the discretion of the Incentive Plan Committee. The
Incentive Plan Committee will require a Grantee receiving an award of Restricted
Shares to enter into a Restricted Share Agreement with us containing the
foregoing restrictions and such other terms as the Incentive Plan Committee may
deem advisable.
MAXIMUM AWARD. Under the 2002 Officer Incentive Plan, the maximum number
of shares that may be awarded as options to any participant in any fiscal year
is 100,000.
ACCELERATION OF OPTION EXERCISABILITY AND LAPSE OF RESTRICTED PERIOD. The
2002 Officer Incentive Plan provides that upon the earlier of (i) a Change of
Control or (ii) our Common Shares ceasing to be publicly traded, any unexercised
portion of an option shall become exercisable and any Restricted Period
applicable to Restricted Shares shall immediately lapse.
Under the 2002 Officer Incentive Plan, a "Change of Control" is deemed to
have occurred if (i) any "person" (as defined in the 2002 Officer Incentive
Plan) other than PXRE and other than Phoenix Home Life or an affiliate thereof
becomes the "beneficial owner" (as defined in the 2002 Officer Incentive Plan)
other than, with respect to any holder of Series A, Series B or Series C
Convertible Voting Preferred Shares, by reason of the receipt of share
dividends, directly or indirectly, of securities representing 30% or more of the
combined voting power of our then outstanding securities with respect to matters
presented at our general meetings, other than the election of directors ("Voting
Power"); provided, however, that the disposition by an
33
original holder of either Series A, Series B or Series C Convertible Voting
Preferred Shares (a "Preferred Shareholder") of such preferred shares (or any
securities into which such shares have ultimately been converted) to a person
will not constitute a Change of Control under this clause (i) unless (x) such
person, immediately following such acquisition from such Preferred Shareholder,
holds securities representing at least 50% Voting Power, or (y) such person has
acquired securities from more than one Preferred Shareholder in the same or
related transactions, and immediately following the last of such transactions,
holds securities representing at least 30% Voting Power; provided further,
however, if, by reason of the preceding proviso, the acquisition by a person of
at least 30% but less than 50% Voting Power does not constitute a Change of
Control under this clause (i), a Change of Control will be deemed to occur if
such person thereafter becomes the holder of at least 50% Voting Power, whether
or not pursuant to a related transaction; or (ii) our stockholders approve a
merger or consolidation of PXRE with any other corporation (other than certain
situations where our shareholders before such transaction continue in control
after such transaction) or a sale or other disposition of all, or substantially
all, of our assets; or (iii) our stockholders approve a plan of liquidation or
dissolution of PXRE; or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted our Board of
Directors and any new director whose election was approved by at least
two-thirds of the directors who were directors at the beginning of the period or
whose election had previously been so approved, cease to constitute a majority
of the Board of Directors.
OPTIONAL SURRENDER RIGHTS. The Incentive Plan Committee may grant to a
Grantee for up to 60 days following a Change of Control the right to elect to
surrender all or part of his option and to receive a cash payment equal to the
greater of (a) the excess of the fair market value of the option shares
surrendered over the exercise price for such shares, or (b) except for Incentive
Stock Options, the excess of the per share net worth (as determined under the
2002 Officer Incentive Plan) of the shares to which the surrendered option
pertains on the date of surrender over the per share net worth of such shares on
the date the option was granted.
For this purpose, the 2002 Officer Incentive Plan provides that "fair
market value" for Non-Qualified Options is the higher of (a) the highest trading
price of our Common Shares (as determined under the Incentive Plan) during the
90-day period ending on the date of such election, or (b) if the change in
control occurs as the result of a person acquiring a 30% interest in PXRE, the
highest price per Common Share shown on Schedule 13D or any amendment thereto
filed by any person holding 30% more of such shares, or (c) if the Change of
Control occurs as the result of shareholder approval of a merger, or
consolidation (as described in the 2002 Officer Incentive Plan) or any sale or
other disposition of all or substantially all of our assets, the highest price
per share paid pursuant to such transaction. With respect to Incentive Stock
Options, "fair market value" means fair market value as determined under the
2002 Officer Incentive Plan.
In addition, under the 2002 Officer Incentive Plan the Grantee may elect up
to 60 days following the cessation of the public trading of our Common Shares
(other than where due to the fraud or other misconduct of the management) to
surrender all or part of his or her option and receive a cash payment equal to
the greater of (a) the excess of the fair market value of the shares subject to
the surrendered option over the exercise price or (b) except for Incentive Stock
Options, the amount determined under the per share net worth valuation method
described above. For this purpose, "fair market value" means the highest public
trading value (as determined under the 2002 Officer Incentive Plan) during the
90-day period ending on the date of such cessation of public trading, except
that for Incentive Stock Options it means "fair market value" as determined
under the 2002 Officer Incentive Plan.
The 2002 Officer Incentive Plan also provides that if a Grantee does not
make an election under either of the above provisions on or before the 60th day
following a Change of Control resulting from certain mergers
34
and consolidations, the sale of all or substantially all of our assets, our
liquidation or dissolution, or such cessation of public trading, the Grantee
will be deemed to have made such election as of such 60th day, the Grantee will
receive the cash payment that would be due upon such an election and the
Grantee's option and surrender rights will be deemed to have been canceled.
ADJUSTMENTS IN OUTSTANDING OPTIONS AND RESTRICTED SHARES. In the event our
outstanding Common Shares are increased or changed into or exchanged for a
different number or kind of shares of capital stock or other securities of PXRE
by reason of any stock dividend or split, recapitalization, reclassification,
merger, consolidation, combination of shares or other corporate change, the
Incentive Plan Committee may make such substitution or adjustment, if any, as it
deems to be equitable, in the number or kind of shares or other securities
authorized for issuance under the 2002 Officer Incentive Plan and in the number
of shares and the exercise price under options granted prior to such changes.
NEW PLAN BENEFITS. Because awards under the 2002 Officer Incentive Plan
are discretionary, future awards under the plan are not determinable. No awards
have been granted under the 2002 Officer Incentive Plan as of the date of this
Proxy Statement.
U.S. FEDERAL INCOME CONSEQUENCES; OPTIONS. Options under the 2002 Officer
Incentive Plan may, for federal income tax purposes, be treated as Non-Qualified
Options or as Incentive Stock Options. The grant of a Non-Qualified Option is
not a taxable event to the Grantee. The difference between the option price and
the fair market value of the stock on the date of exercise of a Non-Qualified
Option is taxable as ordinary income to the Grantee at the time of exercise.
Such amount is subject to withholding of federal income tax. Gain or loss on the
subsequent sale of stock acquired upon exercise of a Non-Qualified Option will
be eligible for capital gain or loss treatment (long-term or short-term, as the
case may be). For this purpose, such stock has a basis equal to the option price
plus the amount included in income by the Grantee. In general, any U.S.
corporation in the PXRE U.S. tax group employing the relevant Grantee will be
entitled to an income tax deduction in the same amount and at the same date as
the U.S. Grantee recognizes ordinary income.
An Incentive Stock Option results in no taxable income to the Grantee at
the time it is granted. Upon the exercise of an Incentive Stock Option, no U.S.
corporation in the PXRE U.S. tax group will be entitled to any deduction and no
ordinary income will be recognized by the U.S. Grantee. If the stock acquired by
the Grantee upon exercise of an Incentive Stock Option while an employee, or
within three months of termination of employment (one year in the case of
permanent disability), is held for a period of more than (a) two years from the
date of the grant of the option and (b) one year after the date of acquisition
of the stock, any gain on the subsequent sale of the stock will be taxed to the
optionee as a capital gain.
If stock acquired upon exercise of any Incentive Stock Option is disposed
of before the expiration of either the two year or one-year periods referred to
above, the lesser of (a) any excess of the fair market value of the stock at the
time the option is exercised over the option price or (b) if applicable, any
excess of the amount realized upon a taxable sale of stock over the option
price, will be treated as ordinary income to the grantee at the time of such
disposition and will be allowed as a deduction to any U.S. corporation in the
PXRE U.S. tax group employing the relevant U.S. Grantee. Any excess of the
amount realized upon sale over the fair market value of the stock at the time
the option is exercised will be treated as capital gain, and will not be allowed
as a deduction to the applicable corporation. In the event that a Grantee pays
all or part of the exercise price by surrendering previously acquired shares of
stock, the foregoing tax consequences may be modified.
If provided by the Incentive Plan Committee in the Stock Option Agreement,
a U.S. Grantee may satisfy any withholding tax requirements by electing to have
the relevant corporation in the PXRE U.S. tax group
35
withhold from the shares to be received by such Grantee upon the exercise of
options sufficient whole shares having a value not in excess of the Grantee's
withholding tax in respect thereof, with any remaining amount needed to cover
the amount of such withholding tax to be paid by the Grantee in cash. Any shares
withheld in payment of taxes will not be available for use in subsequent grants
of options or Restricted Share awards.
U.S. FEDERAL INCOME TAX CONSEQUENCES; RESTRICTED SHARES. The grant of
Restricted Shares will not result in income to the U.S. Grantee or any deduction
for any member of the PXRE U.S. tax group for federal income tax purposes, since
the Restricted Shares are subject to restrictions constituting a "substantial
risk of forfeiture" as defined in the Code. Unless a U.S. Grantee of a
Restricted Share award elects to be taxed at the date of grant, such U.S.
Grantee will generally realize taxable compensation income when the Restricted
Period applicable to the award lapses. The amount of such income will be the
fair market value of the Restricted Shares on the date of such lapse of the
Restricted Period. Dividends paid on the Restricted Shares during the restricted
Period will also be taxable compensation income to the U.S. Grantee when
received by the U.S. Grantee. In general, any corporation in the PXRE U.S. tax
group employing the relevant U.S. Grantee will be entitled to a tax deduction to
the extent, and at the time, that the U.S. Grantee realizes compensation income.
Income tax withholding will be required at the same time the Restricted Period
lapses.
Upon the lapse of the Restricted Period for any Restricted Shares, the
corporation in the PXRE U.S. tax group employing the relevant U.S. Grantee will
withhold from the number of Restricted Shares to be received by a U.S. Grantee
sufficient whole Shares with a value not in excess of the amount of the U.S.
Grantee's withholding tax in respect thereof and will withhold any remaining
amount needed to cover the amount of such withholding tax from other
compensation payable to the U.S. Grantee. Any shares withheld in payment of
taxes will not be available for use in subsequent grants of options or
Restricted Share awards.
AMENDMENT OF THE 2002 OFFICER INCENTIVE PLAN. Our Board of Directors or
the Incentive Plan Committee may, from time to time, amend, suspend or terminate
any or all of the provisions of the 2002 Officer Incentive Plan; provided,
however, shareholder approval will be required for any amendment to the 2002
Officer Incentive Plan which (i) materially increases the benefits accruing to
participants under the 2002 Officer Incentive Plan, (ii) increases the number of
securities which may be issued under the 2002 Officer Incentive Plan or (iii)
materially modifies the requirements for participants in the 2002 Officer
Incentive Plan.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL
TO ADOPT THE 2002 OFFICER INCENTIVE PLAN.
APPROVAL OF AMENDMENTS TO THE EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "Employee Plan") provides employees
of PXRE and our participating subsidiaries with an opportunity to own an
interest in PXRE by purchasing Common Shares at a discount through payroll
deductions.
On February 12, 2002, our Board of Directors approved an amendment to the
Employee Stock Purchase Plan (the "Employee Plan"), subject to the approval of
our shareholders, to increase the number of Common Shares authorized to be
issued upon the exercise of options granted under the Employee Plan from 185,000
shares to 285,000 shares (the "Amendment"). The purpose of the Amendment is to
increase the number of shares available under the Plan so as to assure that we
can continue to be able to provide incentives to attract and retain talented
employees.
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The following is a brief description of the principal features of the
Employee Plan and the Amendment for which shareholder approval is being sought.
Such description is qualified in its entirety by reference to the terms of the
Employee Plan, as amended, a complete copy of which is attached hereto as
Appendix B.
PURPOSE OF EMPLOYEE PLAN. The purpose of the Employee Plan is (i) to
encourage the ownership of our Common Shares by, and foster increased incentive
in, our full-time employees, (ii) to promote our continued success and further
the interests of our shareholders and (iii) to enable us to attract and retain
valued employees. The Employee Plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Code.
TERMS OF EMPLOYEE PLAN. Adopted in 1987, the Employee Plan provides for
the grant to participating employees of PXRE and our participating subsidiaries
of stock options which are intended to qualify as qualified stock options under
Section 423 of the Code. Such options enable participating employees to purchase
at a specified discount, through a payroll deduction mechanism, our Common
Shares. Subject to certain adjustments for recapitalization events as provided
in the Employee Plan, the maximum number of Common Shares reserved for issuance
upon the exercise of options granted under the Employee Plan was, until the
adoption of the Amendment, 185,000. Pursuant to the Amendment, however, such
maximum number of shares was increased from 185,000 (of which 15,282 remained
available for issuance), to 285,000.
All employees of PXRE and our participating subsidiaries whose customary
employment is more than 20 hours per week for more than five months per calendar
year are eligible to participate in the Employee Plan, except for any employee
owning our stock representing 5% or more of the total combined voting power or
value of all classes of our stock. As of the Record Date, we had approximately
59 full-time employees, of whom 25 were participants in the Employee Plan. Of
such 25 participants, 3 are executive officers, 9 are other officers and 13 are
non-officer employees.
An eligible employee may participate in the Employee Plan by completing and
filing with the appropriate payroll officer a payroll authorization form, which
will authorize payroll deductions from the employee's basic compensation (as
defined in the Employee Plan) for deposit into a payroll deduction account
established for such employee. A participating employee may authorize the
deduction of any amount, provided that such amount is not less than $5.00 per
week or more than the larger of $5.00 per week or 20% of such employee's basic
compensation for the payroll period. An employee may change the amount of his or
her payroll deduction by filing a new payroll authorization form. The change
will become effective with the first payroll period after the change in January,
April, July or October, whichever occurs first.
Each employee participating in the Employee Plan is granted options
thereunder at the beginning of each calendar quarter. On each grant date (as
determined under the Employee Plan), a participating employee is granted an
option to purchase Common Shares on the next quarterly grant date (the "exercise
date") at the applicable per share option price (determined as set forth below).
Options granted under the Employee Plan are not cumulative and expire once the
next quarterly option grant is made.
The option price per share under the Employee Plan is the lesser of (i) 85%
of the fair market value of a Common Share on the date that an option is granted
or (ii) 85% of the fair market value of a Common Share on the exercise date, but
in no event less than par value ($1.00). For purposes of the Employee Plan, the
fair market value of a Common Share on any such date is equal to the average of
the high and low prices quoted for the Common Shares on such date on the New
York Stock Exchange.
On each exercise date, a participating employee's payroll deduction account
is automatically charged for an amount sufficient to purchase the maximum number
of whole Common Shares purchasable at the option
37
price with the balance in the account of such date. The minimum purchase under
the Employee Plan is one share.
Options granted to a participating employee under the Employee Plan are not
transferable other than by will or the laws of descent and distribution and,
during the lifetime of a participating employee, such options are exercisable
only by such employee. In addition, unless a participating employee's
participation in the Employee Plan terminates, such employee may not withdraw
any portion of the credit balance in his or her payroll deduction account.
Participation by an employee in the Employee Plan will terminate if (i) the
employee files a written notification of withdrawal, (ii) the employee is no
longer employed by us or one of our subsidiaries (including cessation of
employment by reason of retirement or death), (iii) the employee ceases to be
eligible for participation in the Employee Plan or (iv) the Employee Plan is
terminated.
Our Board of Directors may at any time amend, suspend or terminate the
Employee Plan without the approval of our shareholders, provided, however,
except for any amendment the purpose of which is to conform the Employee Plan to
the requirements of the Code, no amendment may be effected that would (i)
increase or decrease the number of shares authorized for issuance under the
Employee Plan (other than as provided in the following paragraph), (ii) change
the formula for determining the option price per share under the Employee Plan
or (iii) limit (except by termination of the Employee Plan) the employees of
PXRE or our subsidiaries who may participate in the Employee Plan, in each case
unless such amendment is approved by our shareholders. The Employee Plan will
terminate upon its termination by the Board of Directors or when no more Common
Shares remain to be purchased under the Employee Plan, whichever occurs first.
The Employee Plan provides for appropriate adjustment to be made in the
Employee Plan and in any options granted thereunder to reflect any changes in
our Common Shares by reason of a stock dividend, stock split or otherwise.
The Employee Plan is administered by our Board of Directors or any
committee appointed by the Board of Directors whose members are "disinterested
persons" within the meaning of Rule 16b-3 under the Exchange Act.
NEW PLAN BENEFITS. Because employees have the discretion to elect their
level of participation in the Employee Plan, future awards under the plan are
not determinable.
During the calendar year ended December 31, 2001, a total of 19,745 Common
Shares were issued pursuant to the Employee Plan. Of such total, Messrs. G.
Radke, Bleisnick, Forsyth, Dore and J. Radke, respectively, purchased 0, 0,
1,576, 426 and 2,036 Common Shares, the current executive officers of the
corporations participating in the Employee Plan as a group (6 persons) purchased
4,038 Common Shares, and all other current employees (including all current
non-executive officers) of the corporations participating in the Employee Plan
as a group (27 persons) purchased 15,707 Common Shares, pursuant to the Employee
Plan.
FEDERAL INCOME TAX CONSEQUENCES. Employees participating in the Employee
Plan will not report as income, for U.S. federal income tax purposes, the
benefit received upon the grant of options under the Employee Plan, nor will
they be taxed at the time the options are exercised and the shares are purchased
under the Employee Plan. Similarly, no corporation in the PXRE U.S. tax group
participating in the Employee Plan is allowed a deduction upon the grant or
exercise of options. Thereafter, tax consequences depend upon the timing of the
disposition of shares. (With certain limited exceptions, the term "disposition"
means a sale, exchange, gift or transfer of legal title. Consequently, even a
gift to a member of an employee's family is treated as a disposition of the
shares). At the time of any disposition, the employee making such
38
disposition will generally have to report a combination of ordinary
(compensation) income and capital gain or loss.
If Employee Plan shares are disposed of by a participating employee before
the holding periods incorporated by Section 423 of the Code are satisfied (that
is, within two years after the option is granted or within one year after the
stock is acquired), then the employee will be deemed to have made a
"disqualifying disposition" and will realize ordinary (compensation) income in
the year of disposition in the amount of the difference between what he or she
paid for shares and the fair market value of the shares on the date of purchase.
If the disqualifying disposition is effected by means of a sale, then the
employee may also realize a capital gain or loss. The difference between the
fair market value of the shares on the date of purchase and the sale price will
be treated as capital gain or loss.
If Employee Plan shares are disposed of after the Section 423 holding
periods are satisfied, or upon a participating employee's death at any time,
then the employee (or his or her estate) will realize ordinary (compensation)
income equal to the lesser of (i) the difference between the fair market value
of the shares and the option price on the date the option was granted or (ii)
the actual gain on the disposition. If the disposition is effected by means of a
sale, then the remaining portion of the gain, if any, will be treated as capital
gain. If the sale price for the shares is less than the option price, then there
will be no ordinary income and the employee will have a capital loss in the
amount of the difference.
In general, except in respect of the ordinary income realized by a
participating employee in the event of a disposition of shares in a
disqualifying disposition, any corporation in the PXRE U.S. tax group employing
the employee will have no tax consequences in connection with the grant or
exercise of stock options pursuant to the Employee Plan. However, when an
employee realizes ordinary (compensation) income upon a disqualifying
disposition of Employee Plan shares, such corporation will be entitled to a
federal income tax deduction in an amount equal to the ordinary (compensation)
income so realized by such employee.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL
TO ADOPT THE AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN.
CERTAIN BUSINESS RELATIONSHIPS
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Reference is made to the discussion under "EXECUTIVE
COMPENSATION -- Compensation Committee Interlocks and Insider Participation"
regarding the investment advisory relationship between PXRE and its subsidiaries
and Phoenix Investment Partners, a subsidiary of Phoenix Home Life.
SELECT REINSURANCE LTD.
PXRE Reinsurance Company is a party to a retrocessional agreement (as
amended from time to time, the "Select Re Quota Share Agreement") with Select
Reinsurance Ltd. ("Select Re"), pursuant to which we offer to cede a
proportional share of our non-casualty reinsurance business. In 2001, the
proportional share of our non-casualty business ceded to Select Re under that
agreement was 16.5%. This proportional share has been reduced to 8.0% for 2002.
As a complement to the Select Re Quota Share Agreement, we cede an additional
proportional share to Select Re on certain agreed risks under a variable quota
share agreement. In connection with the Select Re Quota Share Agreement, we have
entered into an undertaking to present Select Re with aggregate annual premiums
equal to a minimum of 20% of Select Re's shareholders' equity. In return,
39
Select Re is obligated to pay us a management fee based on the gross premiums
ceded to them under these quota share agreements.
In addition to the Select Re Quota Share Agreement, we entered into several
other reinsurance transactions with Select Re during 2001 whereby: (i) Select Re
provided retrocessional support on several finite and other lines reinsurance
transactions underwritten by PXRE; (ii) Select Re provided us with aggregate
excess of loss retrocessional coverage that protects us against large losses
arising from a single catastrophe event and against the accumulation of
aggregate losses arising from a number of events; and (iii) we provided Select
Re with catastrophe excess of loss retrocessional coverage that protects them in
the event they incur significant losses arising from a single catastrophe event.
In 2001, we ceded reinsurance premiums of $58 million to Select Re and earned
management fees and ceding commissions of $16.6 million.
As of December 31, 2001, net assets of $102 million were due in the
aggregate from Select Re, $82.1 million of which are secured by way of a
reinsurance trust, or funds withheld by us. In addition to the collateralization
requirements, we have various additional protections to ensure Select Re's
performance of its obligations to us. In this regard, pursuant to the Select Re
Quota Share Agreement, among other rights, we have the right to designate one
member of Select Re's board of directors and we have the right to limit the
amount of non-PXRE reinsurance business assumed by Select Re.
Select Re is a Class 3 Bermuda reinsurance company that was formed in 1997.
As of December 31, 2001, it had shareholders' equity of approximately $169
million and is privately owned by approximately 120 shareholders. In accordance
with our contractual rights under the Select Re Quota Share Agreement, we had
designated Gerald L. Radke, our Chairman, President and Chief Executive Officer,
to serve on Select Re's board of directors. In addition, Jeffrey L. Radke, one
of our Executive Vice Presidents, also sits on Select Re's board. Prior to
joining us in 1999, Jeffrey Radke had served as the President of Select Re and
had been appointed to Select Re's board while he served in that capacity. Mr.
Gerald Radke resigned from Select Re's board in March 2002 and Mr. Jeffrey Radke
is now acting as our designee on their board of directors. Neither individual
received any remuneration for serving on Select Re's board.
As of December 31, 2001, Select Re held 1,112,200 of the Company's Common
Shares, but subsequently liquidated its position in the open market during
February 2002. Gerald Radke, Jeffrey Radke and Halbert Lindquist, one of our
directors, each individually holds Select Re shares, but each such person holds
less than 1% of Select Re's outstanding shares. Mr. William Michaelcheck is the
Chairman of the Board of Select Re and also one of its founding shareholders.
Mr. Michaelcheck is also the President and sole shareholder of Mariner
Investment Group, Inc. ("Mariner"). Mariner acts as the investment manager for
our hedge fund portfolio. In 2001 and 2000, we incurred investment management
fees of $0.8 million and $0.9 million, respectively to Mariner.
The Company's Board of Directors reviews the various transactions with
Select Re at each of its meetings. In addition, the Board has required that the
Company cannot enter into any transaction with Select Re without the prior
approval of the Company's Chief Financial Officer.
BERMUDA HOUSING
During 1999, we entered into a lease for a home in Bermuda for a term of 2
years that allows us to provide housing for various employees when traveling to
Bermuda, including our Chairman, President and Chief Executive Officer at an
annual rental of approximately $90,000, and a lease for an apartment in Bermuda
for a term of 2 years that allows us to provide housing for various employees
when traveling to Bermuda, including our Chief Financial Officer, at an annual
rent of approximately $72,000 in the first year and $84,000 in the
40
second year. These leases were each renewed during 2001 for additional 2-year
terms, at annual rents of $90,000 and $96,000 respectively. These leases relieve
us from providing such persons with a housing allowance.
During 2000, we entered into an arrangement in which Jeffrey Radke leased
and we provided a mortgage for a home in Bermuda for a term of up to 20 years
(the "PXRE Mortgage"). This arrangement fixed the housing allowance expense
borne by us for the period of the PXRE Mortgage. The PXRE Mortgage, in the
amount of $500,000, was provided to a charitable trust to purchase the house and
we received a second mortgage (the first mortgage is in the amount of
$1,000,000). The PXRE Mortgage earns interest at a rate dependent on the sale
price of the home at the conclusion of the PXRE Mortgage. The interest rate is
set at LIBOR.
MORGAN, LEWIS & BOCKIUS LLP
During 2001, PXRE retained, and during 2002, we intend to retain, Morgan,
Lewis & Bockius LLP to provide legal services. Mr. Browne, a director of PXRE,
is senior counsel to Morgan, Lewis & Bockius LLP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than 10% of a registered class of our equity
securities, to file with the Commission and the New York Stock Exchange reports
of ownership and changes in ownership of our registered equity securities.
Executive officers, directors and greater-than-10% stockholders are also
required to furnish us with copies of all Section 16(a) reports they file.
Based solely upon a review of the copies of such reports, and any
amendments thereto, furnished to us and written representations that no Form 5
reports were required, we believe that, during the fiscal year ended December
31, 2001 all Section 16(a) filing requirements applicable to our executive
officers, directors and greater-than-10% stockholders were complied with.
SHAREHOLDER PROPOSALS
If a shareholder desires to present a proposal for inclusion in next year's
Proxy Statement, such shareholder must submit such proposal in writing to us for
receipt not later than December 31, 2002. Proposals must comply with the proxy
rules relating to shareholder proposals, in particular Rule 14a-8 under the
Exchange Act, to be included in our year 2003 proxy materials. Shareholders who
wish to submit a proposal for consideration at our year 2003 Annual General
Meeting of shareholders, but who do not wish to submit a proposal for inclusion
in our proxy materials pursuant to Rule 14a-8 under the Exchange Act, should
deliver a copy of their proposal no later than 45 days prior to the day and
month of the notice of meeting pertaining to the 2002 Annual General Meeting of
Shareholders during the year 2003 and otherwise comply with the notice
provisions of our Bye-Laws. If a shareholder fails to provide such 45 day
notice, the respective proposal need not be addressed in the proxy materials and
the proxies may exercise their discretionary voting authority when the proposal
is raised at the Annual General Meeting. In either case, proposals should be
delivered to PXRE Group Ltd., Suite 231, 12 Church Street, Hamilton HM 11,
Bermuda, Attention: Secretary.
41
GENERAL
Our Annual Report to Shareholders, which contains financial statements for
the year ended December 31, 2001, as well as other information concerning our
operations, is being sent to you with this Proxy Statement.
We file with the Securities and Exchange Commission an Annual Report on
Form 10-K. A copy of the report for fiscal year 2001 will be furnished without
charge to any shareholder sending a written request therefor to: Secretary, PXRE
Group Ltd., Suite 231, 12 Church Street, Hamilton HM 11, Bermuda, or can also be
accessed through our web site at: www.pxregroup.com. At the date of this Proxy
Statement, management has no knowledge of any matters other than those set forth
in this Proxy Statement or referred to in the accompanying Notice of Annual
General Meeting, which will be presented at the Annual Meeting. However, if any
other matters should properly come before the Annual Meeting it is intended that
Proxies shall be voted thereon in accordance with the best judgment of the
person or persons voting such Proxies.
PXRE GROUP LTD.
Hamilton, Bermuda
April 19, 2002
42
APPENDIX A
PXRE GROUP LTD.
2002 OFFICER INCENTIVE PLAN
SECTION 1. GENERAL PROVISIONS
1.1 NAME AND GENERAL PURPOSE. The name of this plan is the PXRE Group Ltd.
2002 Officer Incentive Plan (hereinafter called the "Plan"). The purpose of the
Plan is to enable PXRE Group Ltd. (the "Company") and its affiliates to retain
and attract officers who contribute to the success of the Company by their
ability, ingenuity and industry, and to enable such officers to participate in
the growth of the Company by giving them a proprietary interest in the Company.
1.2 DEFINITIONS.
(a) "AFFILIATE" means any corporation or other entity as to which the
Company possesses a direct or indirect ownership interest and has power to
exercise control, including a Subsidiary.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE OF CONTROL" has the meaning provided in Section 4.2(c) of the
Plan.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMPANY" means PXRE Group Ltd. (or any successor corporation).
(f) "COMMITTEE" means the Committee referred to in Section 1.3 of the Plan.
The functions of the Committee specified in the Plan may also be exercised by
the Board (without regard to whether directors are "non-employee directors"
within the meaning of Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")).
Notwithstanding the foregoing, with respect to a Participant who is likely to be
a "covered employee" at the end of the fiscal year in which an Option is
exercised for purposes of Section 162(m) of the Code, the functions of the
Committee specified in the Plan that must be exercised by "outsider directors"
under Section 162(m) shall be exercised only by a committee appointed by the
Board that consists of two or more "outside directors" (as defined in the
interpretative regulations).
(g) "FAIR MARKET VALUE" as of any day means the average of the high and low
prices per share quoted for Shares on the New York Stock Exchange on such date.
If the Shares are not publicly traded, Fair Market Value shall be determined by
the Committee in a manner consistent with the requirements of Section 422(b)(4)
of the Code.
(h) "OPTION" means any option to purchase Shares under Section 2 of the
Plan.
(i) "PARTICIPANT" means any officer of the Company or of an Affiliate who
is selected by the Committee to participate in the Plan.
(j) "PERMANENT DISABILITY" means a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
(k) "PLAN" means the PXRE Group Ltd. 2002 Officer Incentive Plan.
(l) "RESTRICTED PERIOD" has the meaning provided in Section 3.2(a) of the
Plan.
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(m) "RESTRICTED SHARE" has the meaning provided in Section 3 of the Plan.
(n) "RETIREMENT" means separation from the Company or an Affiliate with the
consent of the Company or Affiliate.
(o) "SHARES" mean the common shares, par value $1.00 per share, of the
Company.
(p) "SUBSIDIARY" means any corporation as to which the Company owns
directly or indirectly fifty percent (50%) or more of the total combined voting
power of all classes of its stock.
1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee, which shall consist of two or more members appointed by the Board who
are "non-employee directors" within the meaning of Rule 16b-3 and, as
applicable, are "outside directors" for purposes of Section 162(m) of the Code.
The Committee shall serve at the pleasure of the Board and have such powers as
the Board may, from time to time, confer upon it. Subject to this Section 1.3,
the Committee shall have sole and complete authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the operation of
the Plan as it shall, from time to time, deem advisable, to interpret the terms
and provisions of the Plan and to correct any defect, supply any omission or
reconcile any inconsistency in the Plan. Any decision or action taken by the
Board (or any members thereof) or the Committee arising out of or in connection
with the construction, administration, interpretation or effect of the Plan
shall be conclusive and binding upon all Participants and any person claiming
under or through any Participant.
Members of the Committee shall not receive compensation for their services
as members but all expenses and liabilities they incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, appraisers, brokers or other persons. The
Committee, the Company and the officers and directors of the Company shall be
entitled to rely upon the advice, opinions or evaluations of any such persons.
No member of the Board or of the Committee shall be liable for any act or
action, whether of commission or omission, taken by any other member or by an
officer, agent or employee, nor for anything done or omitted to be done by such
director except resulting from his own gross negligence or willful misconduct.
The Committee shall keep minutes of its meetings and of actions taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
1.4 ELIGIBILITY. All officers of the Company or any Affiliate which are
selected by the Committee shall be Participants in the Plan.
1.5 SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in
Section 4.1, the aggregate number of Shares (i) to be issued upon exercise of
all Options granted pursuant to the Plan and (ii) to be awarded as Restricted
Shares pursuant to the Plan shall not exceed 1,000,000, plus any option
terminating or expiring for any reason prior to its exercise in full, or any
restricted shares which are forfeited prior to the lapse of the restricted
period under the PXRE Group Ltd. 1992 Officer Incentive Plan, up to a maximum of
1,595,277. Such Shares may be authorized but unissued Shares or treasury Shares.
Shares subject to, but not issued under, any Option terminating or expiring for
any reason prior to its exercise in full, or Restricted Shares which are
forfeited prior to the lapse of the Restricted Period, will again be available
for Options or Restricted Share awards thereafter granted during the balance of
the term of the Plan.
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1.6 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the sole and complete authority to determine (i) the
Participants to whom Options and Restricted Shares shall be granted; (ii) the
number of Shares to be covered by each grant; (iii) the time or times at which
Options shall be granted and exercisable; (iv) the time or times at which
Restricted Shares shall be granted and become nonforfeitable; and (v) the
conditions and limitations, if any, in addition to or in substitution of those
set forth in Sections 2, 3 and 4 hereof, applicable to the exercise of an Option
or vesting of Restricted Shares, including, without limitation, the nature and
duration of the restrictions, if any, to be imposed upon the sale or other
disposition of Shares acquired upon exercise of an Option or receipt of
Restricted Shares. It is contemplated that grants of Options and/or Restricted
Shares shall be granted no more frequently than annually.
SECTION 2. OPTIONS
2.1 TYPES OF OPTIONS. Options granted under the Plan may be of two types,
a non-qualified stock option ("Non-Qualified Option"), and an incentive stock
option ("Incentive Stock Option"). The Committee shall have the authority to
grant Non-Qualified Options, or to grant Incentive Stock Options, or to grant
both types of Options to any Participant, provided, however, that only
Participants employed by the Company or a Subsidiary shall receive Incentive
Stock Options. To the extent that any Option is not designated as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Option.
It is intended that the Incentive Stock Options granted hereunder shall
constitute incentive stock options within the meaning of Section 422(b) of the
Code and shall be subject to the tax treatment described in Section 421 of the
Code. Anything in the Plan to the contrary notwithstanding, no provision of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code.
2.2 OPTION PRICE. The price of Shares purchased upon exercise of Options
granted pursuant to the Plan (including Non-Qualified Options) shall be no less
than the Fair Market Value thereof as of the date that the Option is granted. If
an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 425(d) of the Code) more than 10% of the combined
voting power of all classes of the stock of the Company or a Subsidiary and an
Option granted to such employee is intended to qualify as an Incentive Stock
Option within the meaning of Section 422(b) of the Code, the option price shall
be no less than 110% of the Fair Market Value of the Shares on the date the
Option is granted. Except as set forth in Section 4.1, Options granted under the
Plan may not be repriced.
The purchase price, plus any required Federal income tax or other
withholding amount, shall be paid in full in cash or by certified check or, if
authorized by the Committee in the Stock Option Agreement, Shares of the Company
when the Option is exercised, and certificates evidencing Shares will be
delivered only against such payment.
The Committee may provide in the Stock Option Agreement that an optionee
may satisfy the Company's withholding tax requirements by electing to have the
Company withhold Shares otherwise issuable to the optionee which have a Fair
Market Value on the Tax Date equal to or less than the amount required to be
withheld. The difference, if any, between the withholding amount and the Fair
Market Value of the Shares retained by the Company in satisfaction thereof must
be paid in cash by the Participant. The election shall be irrevocable and shall
be subject to the approval of the Committee. For this purpose, "Tax Date" means
the date which tax is determined due to the exercise of a Non-Qualified Option.
Any Shares withheld in payment of taxes shall not be available for use in
subsequent Option grants or Restricted Share awards.
A-3
2.3 STOCK OPTION AGREEMENTS. Options shall be evidenced by agreements
("Stock Option Agreements") on the terms and conditions set forth in the Plan
and on such other terms and conditions as the Committee may deem advisable. Each
Stock Option Agreement shall specify the number of Shares subject to the Option,
the date or dates on which such Option shall become exercisable, the expiration
date of such Option, the designation of such Option as an Incentive Stock Option
or a Non-Qualified Option, the exercise price of such Option and the date of the
grant of the Option.
2.4 NON-QUALIFIED OPTIONS.
(a) TERM OF OPTION. Each Non-Qualified Option shall be for a term of not
more than ten years from the date of grant.
(b) EXERCISE.
(i) Subject to Section 4.2 and the Committee's discretion, each
Non-Qualified Option by its terms shall require the optionee to remain in
the continuous employ of the Company or an Affiliate for at least one year
from the date of grant of the Option before the option shall be
exercisable, except in the event that the optionee's employment with the
Company or Affiliate terminates as a result of Retirement, Permanent
Disability or death.
(ii) Subject to the Committee's discretion, a Non-Qualified Option
shall not be exercisable by the optionee unless, at the time of exercise,
such optionee is an employee of the Company or an Affiliate, except that,
upon termination of employment with the Company or Affiliate, the optionee
may exercise an Option (1) to the extent of any unexercised Shares, whether
or not the optionee was entitled to do so at the termination of his
employment, at any time within three years thereafter if the termination of
employment results from Retirement or Permanent Disability, or (2) to the
extent that the optionee was entitled to do so at the termination of his
employment, at any time within three months thereafter if the termination
of employment results from a cause other than Retirement, Permanent
Disability or death.
(iii) Subject to the Committee's discretion, in the event of the death
of an optionee while an employee of the Company or an Affiliate, such
optionee's estate or any person who acquired the right to exercise such
Option by bequest or inheritance or by reason of the death of the Optionee
may exercise such optionee's Option to the extent of all unexercised
Shares, whether or not the optionee was entitled to do so at the time of
his death, at any time within three years following his date of death.
(iv) Subject to the Committee's discretion, if the optionee dies
within three months after termination of employment with the Company or any
Affiliate other than resulting from Retirement or Permanent Disability or
within three years after such termination in the case of Retirement or
Permanent Disability, such optionee's estate or any person who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the optionee may exercise (to the extent that the optionee was
entitled to do so at the termination of his employment) such optionee's
Option at any time within the period ending on the later of (1) the last
day of the period within which the optionee could have exercised such
option but for his death or (2) the first anniversary of the optionee's
death.
(v) Notwithstanding any of the foregoing, in no event shall an Option be
exercisable in whole or in part after the termination date provided in the Stock
Option Agreement.
(c) TRANSFERABILITY. Non-Qualified Options shall not be transferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by the optionee or, if legally
incapacitated, by the optionee's duly appointed guardian or legal
representative.
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(d) VESTING. The Committee may, in its sole discretion, provide for the
vesting schedule, if any, applicable to the Option, in an optionee's Stock
Option Agreement. The Committee may also, in its sole discretion, permit the
acceleration of the time to exercise the Option or any installments thereof.
2.5 INCENTIVE STOCK OPTIONS.
(a) TERM OF OPTION. Except as otherwise provided herein, each Incentive
Stock Option shall be for a term of not more than ten years from the date of
grant, except that if any employee owns or is deemed to own (by reason of the
attribution rules of Section 425(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Subsidiary and an
Incentive Stock Option is granted to such employee, the term of such Option
shall be no more than five years from the date of grant.
(b) ANNUAL LIMIT. The aggregate Fair Market Value of the Shares
(determined as of the date of grant) with respect to which Options intended to
be and designated as Incentive Stock Options under the Plan (or any other stock
option plan of the Company or any Subsidiary) are exercisable for the first time
by any employee in any calendar year shall not exceed $100,000.
(c) EXERCISE.
(i) Subject to Section 4.2 and the Committee's discretion, each
Incentive Stock Option by its terms shall require the optionee to remain in
the continuous employ of the Company or an Affiliate for at least one year
from the date of grant of the Option before the Option shall be
exercisable, except in the event that the optionee's employment with the
Company or Affiliate terminates as a result of Retirement, Permanent
Disability or death.
(ii) Subject to the Committee's discretion, an Incentive Stock Option
shall not be exercisable by the Optionee unless, at the time of exercise,
such optionee is an employee of the Company or an Affiliate except that
upon termination of employment with the Company or Affiliate the optionee
may exercise an Incentive Stock Option (1) to the extent of all unexercised
Shares, whether or not the optionee was entitled to do so at the
termination of his employment, at any time within three years thereafter if
the termination of his employment results from Retirement or Permanent
Disability, or (2) to the extent that the optionee was entitled to do so at
the termination of his employment, at any time within three months
thereafter if the termination of employment results from a cause other than
Retirement, Permanent Disability or death. However, the Committee shall
advise the optionee that, under current law, the exercise of an Incentive
Stock Option will be treated for federal income tax purposes as an exercise
of a Non-Qualified Option if he exercises the option (A) more than three
months after the termination of his employment with the Company or a
Subsidiary other than by reason of Permanent Disability or death, or (B)
more than one year after the termination of his employment with the Company
or a Subsidiary by reason of Permanent Disability.
(iii) Subject to the Committee's discretion, in the event of the death
of an optionee while an employee of the Company or an Affiliate, such
optionee's estate or any person who acquired the right to exercise such
Option by bequest or inheritance or by reason of the death of the Optionee
may exercise such optionee's Option to the extent of all unexercised
Shares, whether or not the optionee was entitled to do so at the time of
his death, at any time within three years following his date of death.
(iv) Subject to the Committee's discretion, if the optionee dies
within three months after termination of employment with the Company or any
Affiliate other than resulting from Retirement or Permanent Disability or
within three years after such termination in the case of Retirement or
Permanent Disability, such optionee's estate or any person who acquired the
right to exercise such Option by bequest
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or inheritance or by reason of the death of the Optionee may exercise (to
the extent that the optionee was entitled to do so at the termination of
his employment) such optionee's Option at any time within the period ending
on the later of (1) the last day of the period within which the optionee
could have exercised such Option but for his death or (2) the first
anniversary of the optionee's death. However, the Committee shall advise
the optionee or other person entitled hereunder to exercise the Option,
that, under current law, if he was not an employee of the Company or a
Subsidiary either at the time of his death or within three months before
such time, the exercise by his estate or the person who acquired the right
to exercise such Option by bequest or inheritance or by reason of the death
of the optionee will be treated for federal income tax purposes as the
exercise of a Non-Qualified Option.
(v) Notwithstanding any of the foregoing, in no event shall an Option
be exercisable in whole or in part after the termination date provided in
the Stock Option Agreement.
(d) TRANSFERABILITY. Incentive Stock Options shall not be transferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by the optionee or, if legally
incapacitated, by the optionee's duly appointed guardian or representative.
(e) VESTING. The Committee may, in its sole discretion, provide for the
vesting schedule, if any, applicable to the Option, in an optionee's Stock
Option Agreement. The Committee may, in its sole discretion, permit the
acceleration of the time to exercise an Option or any installments thereof.
2.6 STATUS OF OPTIONEES. An optionee shall not be, nor have any of the
rights or privileges of, a holder of Shares purchasable upon the exercise of an
Option unless and until certificates representing such Shares have been issued
to such optionee.
2.7 MAXIMUM AWARD. The maximum number of Shares for which Options may be
awarded to any Participant in any fiscal year of the Company shall be 100,000
Shares.
SECTION 3. RESTRICTED SHARES
3.1 RESTRICTED SHARE GRANTS. All Restricted Shares shall be subject to the
following terms and conditions and to any other terms and conditions not
inconsistent with the Plan as may be prescribed by the Committee in its sole
discretion and contained in the agreement between the Company and the
Participant relating to such Shares (the "Restricted Share Agreement").
3.2 RESTRICTED SHARE AGREEMENT.
(a) DELIVERY OF RESTRICTED SHARES. Unless otherwise determined by the
Committee in its sole discretion, the Company shall transfer from its treasury
Shares or from its authorized but unissued Shares to each Participant receiving
a Restricted Share award, the number of Shares specified in the Restricted Share
Agreement, and shall hold the certificates representing such Shares for the
Participant for the period during which such Shares are subject to the
restrictions provided by the Committee in the Restricted Share Agreement (the
"Restricted Period"). Restricted Shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered by a Participant during the
Restricted Period, except as hereinafter provided. Except for the restrictions
set forth herein and unless otherwise determined by the Committee, a Participant
shall have all the rights of a stockholder with respect to his or her Restricted
Shares, including but not limited to the right to vote and the right to receive
dividends (which if in Shares shall be restricted under the same terms and
conditions as the Shares to which they relate).
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(b) LEGEND. Each certificate for Shares transferred or issued to a
Participant under a Restricted Share Agreement shall be registered in the name
of the Participant and shall bear the following (or a similar) legend:
"THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE PXRE GROUP LTD. 2002
OFFICER INCENTIVE PLAN (THE "PLAN") APPLICABLE TO RESTRICTED SHARES AND TO
THE RESTRICTED SHARE AGREEMENT DATED (THE "AGREEMENT"), AND
MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF OR ENCUMBERED IN ANY MANNER DURING THE RESTRICTED PERIOD
SPECIFIED IN SUCH AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE
WITH THE SECRETARY OF THE COMPANY."
3.3 LAPSE OF RESTRICTED PERIOD. The Restricted Period shall commence upon
the award of Restricted Shares and, unless sooner terminated as otherwise
provided herein, shall continue for such period of time as specified by the
Committee in the Restricted Share Agreement. Notwithstanding anything in the
Plan which may be construed to the contrary, the Restricted Period shall
continue for a period of not less than three (3) years (unless sooner terminated
pursuant to subparagraph (a) hereof or Section 4.2(a) of the Plan); provided,
however, that the restrictions may lapse ratably during the Restricted Period.
(a) RETIREMENT, DEATH OR DISABILITY. Unless the Committee shall
otherwise provide in the Restricted Share Agreement (and subject to Section
3.3(c) and (d) hereof), the Restricted Period covering all Shares
transferred to a Participant under the Plan shall immediately lapse upon
such Participant's termination of employment due to Retirement, death or
Permanent Disability.
(b) TERMINATION OF EMPLOYMENT. Unless the Committee shall otherwise
provide in the Restricted Share Agreement, if a Participant ceases to be
employed by the Company other than due to Retirement, death or Permanent
Disability, all Shares owned by such Participant for which the Restricted
Period has not lapsed shall revert back to the Company upon such
termination and shall be available for grant in subsequent Restricted Share
awards. Authorized leaves of absence or absence in military service shall
constitute employment for this purpose.
(c) WAIVER OF FORFEITURE PROVISIONS. The Committee, in its sole and
absolute discretion (but subject to the provisions of Section 3.3(d)
hereof), may waive the forfeiture provisions in respect of all or some of
the Restricted Shares awarded to a Participant.
(d) EXCHANGE ACT LIMITATIONS. In the case of any Participant subject
to the reporting requirements of Section 16 of the Exchange Act, no Shares
received under a Restricted Share award may be sold, assigned, pledged or
otherwise transferred for the period of time after the date such Restricted
Share award was granted as is specified in Rule 16b-3, if applicable.
(e) ISSUANCE OF NEW CERTIFICATES. Upon the lapse of the Restricted
Period with respect to any Shares, such Shares shall no longer be subject
to the restriction imposed in the Restricted Share Agreement, and the
Company shall issue new share certificates respecting such shares
registered in the name of the Participant without the legend described in
Section 3.2(b) in exchange for those previously issued.
3.4 WITHHOLDING TAX. Upon the lapse of the Restricted Period for any
Shares, the Company shall withhold from the Participant's Shares sufficient
Shares to cover the amount which the Company is required to withhold under any
applicable Federal or other tax law. The number of Shares withheld shall be the
number
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of whole Shares the value of which, based on the Fair Market Value of the Shares
on the day the Restricted Period lapses, does not exceed the applicable
withholding tax. The Company may withhold any remaining amount required to
satisfy its withholding tax requirement from other compensation due to the
Participant or may require the Participant to give the Company a check for such
amount before delivering new certificates. Any Shares withheld in payment of
taxes shall not be available for use in subsequent Option grants or Restricted
Share awards.
SECTION 4. OTHER PROVISIONS
4.1 ADJUSTMENTS IN AUTHORIZED SHARES AND IN OUTSTANDING OPTIONS. In the
event the outstanding Shares are increased or changed into or exchanged for a
different number or kind of shares of capital stock or other securities of the
Company by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination of Shares or other
corporate change, the Committee shall make such substitution or adjustment, if
any, as it deems to be equitable, in the number or kind of Shares or other
securities as to which Options or Restricted Share awards may be granted under
Section 1.5 and in the number of Shares or the exercise price under unexercised
Options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate Option
price in each Stock Option Agreement of all the Shares covered thereby prior to
such substitution or adjustment shall be the Option price for all the shares or
other securities substituted for such Shares or to which such Shares are
adjusted, and the Option price per share after such substitution or adjustment
shall be determined accordingly; provided, however, that no such determination
shall obligate the Company to issue or sell fractional shares or other
securities.
4.2 ACCELERATION AND SETTLEMENT ON CERTAIN CHANGES.
(a) ACCELERATION. Notwithstanding any other provisions of the Plan, upon
the earlier of (i) a "Change of Control" of the Company (as defined below), or
(ii) the Shares of the Company ceasing to be publicly traded, any unexercised
portion of an Option shall become exercisable, and any Restricted Period with
respect to Restricted Shares shall lapse.
(b) OPTIONAL SURRENDER RIGHTS.
(i) The Committee may, in its sole discretion, grant to optionees who
are subject to Section 16(b) of the Exchange Act in conjunction with
Options, either at the time of grant or, with the consent of the optionee,
by amendment thereafter, the right to elect up to 60 days following a
Change of Control (other than where a person becomes a person described in
Section 4.2(c)(i) after May 30, 2002, by acquiring from Phoenix Home Life
Mutual Insurance Company or an affiliate ("Phoenix Home Life") in a private
transaction Shares equal to the number of shares owned by Phoenix Home Life
on May 30, 2002) to surrender all or part of his or her Options and to
receive a cash payment equal to the greater of (A) the excess of the fair
market value of the Shares subject to the Options surrendered over the
exercise price for such Shares, or (B) except for Incentive Stock Options,
the excess of the per Share net worth (determined in accordance with
generally accepted accounting principles consistently applied as of the
close of the Company's next preceding fiscal year) of the Shares to which
the surrendered Option or portion thereof pertains on the date of surrender
over the per Share net worth of such Shares on the date that the Option was
granted. For this purpose, "fair market value" with respect to Shares
subject to Non-Qualified Options means the higher of (1) the highest weekly
weighted average trading price for the Shares during a calendar week which
is included in the 90-day period ending on the date of such election and in
which the average weekly reported volume of trading in the Shares is equal
to or greater than the
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mean of the weekly reported volumes of trading in the Shares during such
90-day period, or (2) if the Change of Control occurs as a result of a
transaction described in Section 4.2(c)(i), the highest price per share
shown on Schedule 13D or an amendment thereto filed pursuant to Section
13(d) of the Exchange Act by any person (as defined in Section 4.2(c)(i)
holding 30% or more of the combined voting power of the Company's then
outstanding voting securities, or (C) if the Change of Control occurs as a
result of shareholder approval of a transaction described in Section
4.2(c)(ii), the highest price paid or to be paid per share pursuant to such
transaction as determined by the Committee. With respect to Shares subject
to an Incentive Stock Option, "fair market value" means Fair Market Value
as provided in Section 1.2(g). Payment of such amount, less applicable
withholding taxes, shall be made by the Company to the optionee in cash,
subject to the applicable provisions of Rule 16b-3 under the Exchange Act
as then in effect, promptly upon the receipt by the Committee of the
optionee's election.
(ii) An optionee may, if at the time of the grant or, with the consent
of the optionee, by amendment thereafter, the Committee so determines in
its sole discretion, elect up to 60 days following the date the Shares
cease to be publicly traded (except where the stock is delisted due to
fraud or other misconduct of the Company's management) to surrender all or
part of his Options and to receive a cash payment equal to the greater of
(A) the excess of the fair market value of the Shares subject to such
surrendered Options over the exercise price for such Shares, or (B) except
for Incentive Stock Options, the amount determined using the per Share net
worth valuation method in Section 4.2(b)(i) as of the surrender date. For
this purpose, "fair market value" means the highest weekly weighted average
trading price for the Shares during a calendar week which is included in
the 90-day period ending on the date the Shares cease to be publicly traded
and in which the average weekly reported volume of trading in the Shares is
equal to or greater than the mean of the weekly reported volumes of trading
in the Shares during such 90-day period, except that with respect to Shares
which are subject to an Incentive Stock Option it shall mean Fair Market
Value as provided in Section 1.2(g) on the date of surrender. Payment of
such amount, less applicable withholding taxes, shall be made by the
Company in cash promptly upon the receipt by the Committee of the
optionee's election.
(iii) If an optionee does not make an election under part (i) or (ii)
on or before the 60th day following a Change of Control described in
Section 4.2(c)(ii) or (iii) or the date the Shares cease to be publicly
traded (except where the stock is delisted due to fraud or other misconduct
of the Company's management), as the case may be, the optionee shall be
deemed to have made such an election as of such 60th day, he shall receive
the cash payment which he would have received had he made an election on
such date, all of his Options and surrender rights shall be deemed to have
been canceled as of such date, and his sole right under the Plan shall be
to receive such cash payment, subject to applicable withholding taxes. In
the case of an optionee who does not have an election under part (i) and
whose Option is unexercised in whole or part on the 60th day following a
Change of Control described in Section 4.2(c)(ii) or (iii), the optionee
shall receive a cash payment with respect to his unexercised Option
determined under the foregoing as if he had an election, and had made it,
on such 60th day, and his rights under the Plan thereafter shall solely be
those provided to an optionee subject to the first sentence in this part
(iii).
(iv) An optionee who is subject to Section 16(b) of the Exchange Act
may not exercise an election under this subsection (b) in any manner which
is not in compliance with Rule 16b-3(e).
(v) An election shall not be transferable other than by will or by the
laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by the optionee or, if legally incapacitated, by
the optionee's duly appointed guardian or representative.
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(c) CHANGE OF CONTROL. For the purposes hereof, a "Change of Control" of
the Company shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) other than the Company and other than Phoenix Home Life
or an affiliate thereof becomes the "beneficial owner" (as determined for
purposes of Regulation 13-D under the Exchange Act as currently in effect)
other than, with respect to any holder of Series A, Series B or Series C
Convertible Voting Preferred Shares, by reason of the receipt of share
dividends, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities with respect to matters presented at the Company's
general meetings, other than the election of directors ("Voting Power");
provided, however, that the disposition by an original holder of either
Series A, Series B or Series C Convertible Voting Preferred Shares (a
"Preferred Shareholder") of such preferred shares (or any securities into
which such shares have ultimately been converted) to a person will not
constitute a Change of Control under this clause (i) unless (x) such
person, immediately following such acquisition from such Preferred
Shareholder, holds securities representing at least 50% Voting Power, or
(y) such person has acquired securities from more than one Preferred
Shareholder in the same or related transactions, and immediately following
the last of such transactions, holds securities representing at least 30%
Voting Power; provided further, however, if, by reason of the preceding
proviso, the acquisition by a person of at least 30% but less than 50%
Voting Power does not constitute a Change of Control under this clause (i),
a Change of Control will be deemed to occur if such person thereafter
becomes holder of at least 50% Voting Power, whether or not pursuant to a
related transaction; or
(ii) the stockholders of the Company approve (A) any merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation with Transnational Re Corporation in which the
Company is the surviving entity or a merger or consolidation which would
result in the holders of the voting securities of the Company outstanding
immediately prior thereto holding immediately thereafter securities
representing more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (B) any sale or other disposition
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or
(iii) the stockholders of the Company approve a plan or proposal for
the liquidation or dissolution of the Company; or
(iv) during any period of two consecutive years (not including any
period prior to May 30, 2002), individuals who at the beginning of such
period constitute the entire Board of Directors of the Company and any new
director, whose election to the Board or nomination for election to the
Board by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority of the Board.
4.3 NON-ALIENATION OF BENEFITS. Except as herein specifically provided, no
Option, no Restricted Share, and no right or interest under the Plan shall be
subject to transfer, assignment, pledge, charge or other alienation, whether
voluntary or involuntary, and any attempt to transfer, assign, pledge, charge or
otherwise alienate the same shall be null and void and of no effect. If any
Participant or other person entitled to benefits hereunder should attempt to
assign, pledge, charge or otherwise alienate any right or interest hereunder,
then such benefits shall, in the discretion of the Committee, cease.
4.4 ADMINISTRATION EXPENSES. The Company shall bear the entire expense of
administering the Plan.
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4.5 AMENDMENT. The Board or the Committee may, from time to time, amend,
suspend or terminate any or all of the provisions of the Plan; provided,
however, without an optionee's approval, no change may be made which would
prevent an Incentive Stock Option granted under the Plan from qualifying as an
Incentive Stock Option under Section 422 of the Code, result in a "modification"
of the Incentive Stock Option under Section 424(h) of the Code or otherwise
adversely alter or impair any right granted to any Participant prior to such
action; provided, further, except as provided in Section 4.1, that without
further approval by the holders of a majority of the outstanding Shares of the
Company entitled to vote thereon, no amendment shall be made to the Plan which
(i) materially increases the benefits accruing to Participants, (ii) increases
the number of Shares which may be issued under the Plan, or (iii) materially
modifies the requirements for Participants to participate in the Plan.
Except as otherwise prohibited in the Plan (including but not limited to
Sections 2.2 and 3.3 of the Plan), and subject to the terms of the Plan, the
Committee may modify, extend or renew outstanding Options or Restricted Shares
in any manner. However, the Committee shall not modify any rights or obligations
under any outstanding Option or Restricted Share without the consent of the
Participant.
4.6 CONTINUATION OF EMPLOYMENT. Participation in the Plan will not confer
upon any employee any right to continue in the employ of the Company or any
Affiliate or limit, in any way, the right of the Company or any Affiliate to
terminate a Participant's employment with the Company or Affiliate, at any time.
Nothing contained in the Plan shall prohibit the Company or any Subsidiary or
Affiliate from establishing other additional incentive compensation arrangements
for employees of the Company or such Subsidiary or Affiliate.
4.7 COMPLIANCE WITH APPLICABLE LAW. Notwithstanding any other provision of
the Plan, the Company shall not be under any obligation to distribute any
Shares, unless the Committee has determined that it may do so without violation
of the applicable federal or state laws pertaining to the issuance of
securities, and the Company may require any certificates evidencing such Shares
to bear a legend (in addition to the legend required by Section 3.2(b) hereof),
may give its transfer agent instructions, and may take such other steps, as in
its judgment are reasonably required to prevent any such violation. No Shares
shall be issued under the Plan unless the Participant first enters into an
agreement with the Company providing for compliance by the Participant with all
such applicable laws.
The Plan shall be governed by and construed in accordance with the laws of
New York.
4.8 EFFECTIVE DATE. This Plan was originally adopted by the Board on
February 13, 2002, with an effective date of May 30, 2002.(1)
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1 The Plan is subject to the approval by the affirmative vote of the
holders of a majority of the outstanding shares of the Company's Shares in
person or represented by proxy at the 2002 Annual Meeting of Stockholders of
PXRE Corporation to be held on May 30, 2002.
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APPENDIX B
PXRE GROUP LTD.
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED FEBRUARY 13, 2002)
This Stock Purchase Plan (the "Plan") of PXRE Group Ltd. (the
"Corporation") is established to provide eligible employees of the Corporation
or its subsidiaries a continual opportunity to purchase common stock of the
Corporation through payroll deductions.(1)
1. STOCK SUBJECT TO PLAN.
The stock subject to the Plan shall be Shares of the Corporation's
authorized but unissued or reacquired Common Shares ("Common Shares" or
"Shares"), par value $1.00 per share. The aggregate number of Shares on which
options may be granted pursuant to the Plan shall not exceed 285,000 Shares. If
an option shall expire or terminate for any reason without having been exercised
in full, the Shares subject to the unexercised or terminated option shall not be
considered to have been subject to an option for purposes of the limitation on
the aggregate number of Shares subject to the Plan.
2. ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the Corporation
or any committee thereof appointed by the Board of Directors. Subject to the
provisions of the Plan set forth herein, the Board or such committee is
authorized to establish rules and regulations pertaining to administration of
the Plan.
3. GENERAL RESTRICTIONS.
Under this Plan:
(a) Options are to be granted only to employees of the Corporation or
of its parent or subsidiary corporations to purchase stock in any such
corporation.
(b) No employee shall be granted an option if such employee,
immediately after the option is granted, owns stock possessing 5 percent or
more of the total combined voting power or value of all classes of stock of
the Corporation or of its parent or subsidiary corporation. For purposes of
this paragraph, the rules of Sec. 425(d) of the Internal Revenue Code shall
apply in determining the stock ownership of an individual, and stock which
the employee may purchase under outstanding options shall be treated as
stock owned by the employee.
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1 The Plan was originally a plan of PXRE Corporation, a Delaware
corporation ("PXRE Corp."), which provided, among other things, for the grant of
PXRE Corp. stock. Pursuant to an Agreement and Plan of Merger dated as of July
7, 1999 among the Corporation, PXRE Corp. and PXRE Merger Corp., PXRE Corp.
reorganized so that, among other things, the Corporation, a Bermuda corporation,
became the parent holding company for PXRE Corp. As a result of the
reorganization, each outstanding share of PXRE Corp. under the Plan was
automatically converted into one common share of the Corporation. Additionally,
pursuant to the reorganization, the Corporation assumed all of the obligations
of PXRE Corp. under the Plan.
B-1
(c) No employee shall be granted an option which permits his rights to
purchase stock under all such plans of his employer Corporation and its
parent and subsidiary corporations to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is
outstanding at any time. For purposes of this paragraph:
(1) the right to purchase stock under an option accrues when the
option (or any portion thereof) first becomes exercisable during the
calendar year;
(2) the right to purchase stock under an option accrues at the rate
provided in the option, but in no case may such rate exceed $25,000 of
fair market value of such stock (determined at the time such option is
granted) for any one calendar year; and
(3) a right to purchase stock which has accrued under one option
granted pursuant to the plan may not be carried over to any other
option.
(d) Such option shall not be transferable by such employee otherwise
than by will or the laws of descent and distribution, and such option may
be exercised, during his lifetime, only by him.
(e) All employees granted options under this plan shall have the same
rights and privileges, other than restrictions herein related to the
percentage of an employee's compensation which may be credited toward such
employee's account hereunder.
(f) No option granted hereunder may be exercised after the expiration
of 3 months from the date such option is granted.
4. ELIGIBILITY.
All employees of the Corporation or any of its subsidiaries shall be
eligible to participate in the Plan except:
(a) Employees whose customary employment is 20 hours or less per week,
and
(b) Employees whose customary employment is for not more than 5 months
in any calendar year.
5. PARTICIPATION IN THE PLAN.
To participate in the Plan, whether participating for the first time or
renewing participation after it has been terminated, an eligible employee must
complete and file with the appropriate payroll office a Payroll Authorization
Form, which shall authorize payroll deductions from the employee's Basic
Compensation. Such deductions shall commence with the pay period after the form
is filed with and recorded in the appropriate payroll office, and shall continue
until the employee terminates participation in the Plan or the Plan is
terminated. "Basic Compensation" is regular compensation including commissions,
before any deductions or withholdings, but excluding overtime, bonuses, amounts
paid in reimbursement of expenses (including those paid as part of commissions)
and other additional compensation.
A Participant may authorize the deduction of any amount, provided such
amount is not less than $5.00 per week, nor more than the larger of $5.00 per
week or 20% of his Basic Compensation for the payroll period. The Corporation
shall maintain a payroll deduction account for each participating employee (the
"plan account") to which shall be credited all such payroll deductions and from
which shall be deducted amounts charged for the purchase of Shares hereunder and
withdrawals, as hereinafter provided. No interest will be paid on any plan
account balance.
B-2
(a) A Participant may change the amount of his payroll deduction by
filing a new Payroll Authorization Form. Any change must conform to the
minimum and maximum limitations above. The change will become effective
with the first payroll period after the change in January, April, July, or
October, whichever occurs first. Two such changes are permitted per
calendar year.
(b) Each Participant shall have an option to purchase Common Shares of
the Corporation four times per year. The "Grant Date" of the option to
purchase Shares is the first Monday of January, April, July, and October,
respectively, on which sales of the Corporation's Common Shares are traded
on an exchange, or if the Corporation's Common Shares is not traded on any
such Monday, then the Grant Date is the next succeeding day on which such
stock is traded. On each Grant Date a Participant shall be given an option
to purchase Shares on the next Grant Date (the date on which the Shares are
purchased is hereinafter called the "Exercise Date") at the "Option Price,"
as defined below. Each Option will be exercisable for the three-month
period (an "Option Period") beginning on a Grant Date and ending on the
Exercise Date next succeeding such Grant Date. Effective as of October 1,
1999 and notwithstanding the foregoing, the Exercise Date for options
granted on the July, 1999 Grant Date shall be October 6, 1999.
On each Exercise Date the Participant's account will automatically be
charged for an amount sufficient to purchase the maximum number of whole Shares
purchasable at the Option Price with the balance in such account on the Exercise
Date. As soon after each Exercise Date as practicable, certificates for the
Shares purchased on such Participant's behalf at such Exercise Date will be
distributed to such Participant.
(c) The "Option Price" per share shall be the lesser of (1) 85% of the
fair market value of a share of the Corporation's Common Shares on the
Grant Date, or (2) 85% of the fair market value of a share of the
Corporation's Common Shares on the Exercise Date, but in no event less than
the par value of the Common Shares, which is $1.00 per share. The fair
market value of such stock shall be considered as the mean of the per share
bid and asked price of the Common Shares as reported by the NASDAQ
Interdealer Quotation System on such date or, if the stock is listed on an
exchange, the average of the high and low prices quoted for such stock on
such date.
Notwithstanding the foregoing, it is the express intent of the Corporation
that the Plan comply with the requirements of Sec. 423 (or a successor section)
of the Internal Revenue Code. In the event of an amendment to such section which
would require that this Plan provide for an Option Price greater than the Option
Price provided above, then the Option Price shall be the lowest price which will
bring the Plan into compliance with such section.
(d) The minimum purchase under the Plan is one share.
(e) As of the close of each calendar year, each Participant will be
given a report setting forth the Grant Date and Option Price for his
current option, the net balance in his account as of the beginning of the
year, credits thereto reflecting his payroll deductions during the year,
the number of Shares issued to him during the year, if any, and the price
at which they were issued, refunds, if any, to him during the year and the
net balance in his account at the end of the year.
(f) Stock certificates representing the Shares that a Participant
purchases under the Plan may be issued in his name alone or, if he so
designated in his Payroll Authorization Form, in his name and the name of
another as joint tenants with right of survivorship.
(g) A Participant's rights under the Plan, including any options which
are granted, may not be transferred. Upon his death, any credit balance in
his account or stock certificate representing Shares for
B-3
which an option has already been exercised shall be distributed in
accordance with applicable state law. Rights under the Plan are exercisable
only by a Participant or, in the event of death, by his estate.
(h) A Participant may not withdraw any portion of the credit balance
in his account unless his participation terminates. Participation will
terminate only if one of the following events occurs:
(1) A Participant files a written notification of his withdrawal,
as provided by rules to be established by the Board of Directors. A
Participant may withdraw at any time and for any reason.
(2) A Participant is no longer employed by the Corporation or any
of its subsidiaries. This includes cessation of employment by reason of
death or retirement.
(3) A Participant ceases to be eligible for participation. Thus, if
he is a full-time employee but for some reason he begins working on
part-time basis of 20 hours or less per week or for 5 months or less in
any calendar year, his participation will terminate.
(4) Termination of the Plan.
If one of the above events occurs terminating participation in the Plan, a
withdrawal of the credit balance in a Participant's account can be made.
If participation in the Plan terminates for any of the above reasons, no
further payroll deductions shall be made from a Participant's Basic
Compensation. At his election or that of his estate, as the case may be, the
balance in his account shall be either paid to him or his estate, or shall be
retained until the next Exercise Date to purchase Shares. After termination, he
may not once again begin participation in the Plan until after the next two
succeeding Option Periods following the date of such termination have expired.
6. CHANGE IN CAPITAL STRUCTURE.
The Corporation shall make appropriate adjustment in the Plan and any
option granted under the Plan to reflect any change in the Common Shares of the
Corporation by reason of a stock dividend or split-up or otherwise.
7. USE OF PROCEEDS.
All proceeds received by the Corporation under the Plan shall be used for
its general corporate purposes.
8. AMENDMENTS.
The Board of Directors of the Corporation, at any time, or from time to
time, may amend, suspend, or terminate the Plan without the approval of the
shareholders, provided, however, that except to conform the Plan to the
requirements of the Internal Revenue Code, no amendment shall without the
approval of the shareholders, be made (i) increasing the number of Shares
authorized for the Plan (other than as provided in Section 6), (ii) changing the
formula for determining the Option Price per share, or (iii) further limiting
the employees of the Corporation or its subsidiaries who may participate in the
Plan.
9. EFFECTIVE DATE, SUSPENSION AND TERMINATION.
The Plan shall become effective when (i) the Plan has been adopted by the
Board of Directors and approved by the stockholders of the Corporation by a
majority vote of those present and entitled to vote at any annual or special
meeting at which a quorum is present, (ii) a registration statement under the
Securities Act
B-4
of 1933, as amended, has become effective with respect to the Shares to be
purchased under the Plan and (iii) the Board of Directors of the Corporation has
specified the date of the first Option Period. In all events, this Plan shall
not be effective unless approved by the stockholders of the Corporation within
12 months before or after the date the Plan is adopted. The Plan shall terminate
upon the termination of the Plan by the Board of Directors of the Corporation or
when no more Shares remain to be purchased under the Plan, whichever occurs
first. Upon the termination of the Plan, all unexercised options theretofore
granted pursuant hereto and all authorized payroll deductions hereunder shall
remain in full force and be carried out and effected, and upon the exercise or
termination of such options, as the case may be, the then remaining credit
balances in the respective Participants' plan accounts shall be returned to the
Participants for whom such plan accounts were established. The Plan shall be
suspended and become inoperative with respect to Shares not theretofore optioned
under the Plan (but not with respect to any uncompleted offerings) during any
period in which no registration statement or amendment thereto under the
Securities Act of 1933, as amended, is in effect with respect to the Shares so
remaining to be purchased under the Plan.(2)
10. GOVERNMENTAL REGULATIONS.
The Corporation's obligation to sell and deliver its Common Shares under
the Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such stock.
11. MISCELLANEOUS.
(a) This Plan shall be subject to, and governed by, the laws of the
State of Delaware irrespective of the fact that one or more of the parties
now is, or may become, a resident of a different state.
(b) In the event any parts of this Plan are found to be void, the
remaining provisions of this Plan shall nevertheless be binding with the
same effect as though the void parts were deleted.
(c) Wherever in this Plan, words including pronouns, are used in the
masculine, they shall be read and construed in the feminine or neuter
whenever they would so apply, and wherever in this Plan words, including
pronouns, are used in the singular or plural, they shall be read and
construed in the plural or singular, respectively, wherever they would so
apply.
(d) Claims for benefits under the Plan shall be made in writing to the
Corporation. If such claim for benefits is wholly or partially denied, the
Corporation shall, within a reasonable period of time, but no later than
ninety (90) days after receipt of the claim, notify the claimant of the
denial of the claim. Such notice of denial (i) shall be in writing, (ii)
shall be written in a manner calculated to be understood by the claimant,
and (iii) shall contain (a) the specific reason or reasons for denial of
the claim, (b) a specific reference to the pertinent plan provisions upon
which the denial is based, (c) a description of any additional material or
information necessary for the claimant to perfect the claim, along with an
explanation why such material or information is necessary, and (d) an
explanation of the Plan's claim review procedure.
---------------
2 The Plan was originally adopted by the Board of Directors of Phoenix Re
Corporation and approved by the shareholders of Phoenix Re Corporation on
February 18, 1987; amended by the Board of Directors of Phoenix Re Corporation
on March 25, 1993; approved by the shareholders of Phoenix Re Corporation on May
20, 1993. See Footnote 1.
B-5
(e) Within one hundred twenty (120) days of the receipt by the
claimant of the written notice of denial of the claim, or such later time
as shall be deemed reasonable taking into account the nature of the benefit
subject to the claim and any other attendant circumstances or if the claim
has not been granted within a reasonable period of time, the claimant may
file a written request with the Corporation that it conduct a full and fair
review of the denial of the claimant's claim for benefits, including the
conducting of a hearing, if deemed necessary by the reviewing party. In
connection with the claimant's appeal of the denial of his benefit, the
claimant may review pertinent documents and may submit issues and comments
in writing.
(f) The Corporation shall deliver to the claimant a written decision
on the claim promptly, but not later than sixty (60) days, after the
receipt of the claimant's request for review, except that if there are
special circumstances (such as the need to hold a hearing, if necessary)
which require an extension of time for processing, the aforesaid sixty (60)
day period shall be extended to one hundred twenty (120) days. Such
decision shall (i) be written in a manner calculated to be understood by
the claimant, (ii) include specific reasons for the decision, and (iii)
contain specific references to the pertinent plan provisions upon which the
decision is based.
(g) The Secretary of the Corporation shall maintain a copy of the
Plan, and any amendments thereto.
B-6
PROXY PXRE GROUP LTD. PROXY
ANNUAL GENERAL MEETING OF SHAREHOLDERS
MAY 30, 2002
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald L. Radke and James F. Dore, and
each of them, with full power of substitution, the proxies of the undersigned
to vote all of the Common Shares of PXRE Group Ltd. which the undersigned is
entitled to vote at the Annual General Meeting of Shareholders of PXRE Group
Ltd. to be held at The Fairmont Hamilton Princess, 76 Pitts Bay Road, Hamilton,
Bermuda on May 30, 2002 commencing at 9:00 a.m., local time, and at any
adjournment or adjournments thereof, with all the powers the undersigned would
possess if personally present upon:
UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY
SHALL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF KPMG AS
INDEPENDENT AUDITORS AND TO REFER THEIR REMUNERATION TO THE BOARD OF
DIRECTORS, FOR THE ADOPTION OF THE PXRE 2002 OFFICER INCENTIVE PLAN, AND FOR
THE ADOPTION OF AN AMENDMENT TO THE PXRE EMPLOYEE STOCK PURCHASE PLAN.
(SEE OTHER SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL GENERAL MEETING OF SHAREHOLDERS
PXRE GROUP LTD.
MAY 30, 2002
[DOWN ARROW] PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED [DOWN ARROW]
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
PXRE GROUP LTD. RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES
AND PROPOSALS LISTED ON THIS PROXY.
FOR WITHHELD
(1) ELECTION OF / / / / NOMINEES: GERALD L. RADKE
DIRECTORS WENDY LUSCOMBE
FRANKLIN D. HAFTL
(EXCEPT AS INDICATED OTHERWISE)
IF THERE IS ANY INDIVIDUAL DIRECTOR WITH
RESPECT TO WHOM YOU DESIRE TO WITHHOLD
YOUR VOTE YOU MAY DO SO BY LINING THROUGH
OR OTHERWISE STRIKING OUT HIS OR HER NAME
FOR AGAINST ABSTAIN
(2) TO APPROVE THE RECOMMENDATION OF THE BOARD OF / / / / / /
DIRECTORS THAT KPMG BE APPOINTED AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2002 AND TO REFER
THE DETERMINATION OF THE AUDITOR'S REMUNERATION
TO THE BOARD OF DIRECTORS.
(3) TO APPROVE THE ADOPTION OF THE PXRE
2002 OFFICER INCENTIVE PLAN.
(4) TO APPROVE THE ADOPTION OF AN
AMENDMENT TO THE PXRE EMPLOYEE STOCK
PURCHASE PLAN.
SIGNATURE_______________ SIGNATURE________________ DATED: ________________, 2001
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. IF SIGNING FOR
ESTATES, TRUSTS OR CORPORATIONS, TITLE OR CAPACITY SHOULD BE STATED. IF SHARES
ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN.