def14a
SCHEDULE 14A
INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE
ACT OF 1934 (AMENDMENT
NO. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
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Confidential, for Use of the Commission Only
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(as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
Section 240.14a-12
W. R. BERKLEY CORPORATION
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
W. R.
BERKLEY CORPORATION
475 Steamboat Road
Greenwich, Connecticut
06830
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
May 18, 2010
To The Stockholders of
W. R. Berkley
Corporation:
Notice Is Hereby
Given that the Annual Meeting of Stockholders of W. R.
Berkley Corporation (the “Company”) will be held at
its executive offices at 475 Steamboat Road, Greenwich,
Connecticut, on Tuesday, May 18, 2010 at 1:00 p.m. for
the following purposes:
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(1)
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To elect as directors to serve until their successors are duly
elected and qualified the four nominees named in the
accompanying proxy statement;
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(2)
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To ratify the appointment of KPMG LLP as the independent
registered public accounting firm for the Company for the fiscal
year ending December 31, 2010; and
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(3)
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To consider and act upon any other matters which may properly
come before the Annual Meeting or any adjournment thereof.
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In accordance with the Company’s By-Laws, the Board of
Directors has fixed the close of business on March 23, 2010
as the date for determining stockholders of record entitled to
receive notice of, and to vote at, the Annual Meeting.
We are pleased to take advantage this year of the Securities and
Exchange Commission rule allowing companies to furnish proxy
materials to stockholders over the Internet. We believe that
this e-proxy
process expedites stockholders’ receipt of proxy materials,
while also lowering the costs and reducing the environmental
impact of our Annual Meeting. On April 8, 2010, we began
mailing to our stockholders a Notice of Internet Availability of
Proxy Materials containing instructions on how to access our
2010 proxy statement and 2009 annual report and vote online.
Your attention is directed to the accompanying proxy statement.
You are cordially invited to attend the Annual Meeting.
Your vote is important. Please vote as soon as possible by
using the Internet or by telephone or, if you received a paper
copy of the proxy card by mail, by dating, signing and returning
the enclosed proxy card. Instructions for your voting options
are described on the Notice of Internet Availability of Proxy
Materials or proxy card.
By Order of the Board of Directors,
Senior Vice President,
General Counsel and Secretary
Dated: April 8, 2010
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE 2010 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON MAY 18, 2010:
The Proxy Statement and the Company’s Annual Report for
the fiscal year ended December 31, 2009 are available free
of charge on the website at
www.proxyvote.com.
W. R.
BERKLEY CORPORATION
PROXY STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
May 18, 2010
Your proxy is being solicited on behalf of the Board of
Directors of W. R. Berkley Corporation (the “Company”)
for use at the Annual Meeting of Stockholders to be held at the
executive offices of the Company, 475 Steamboat Road, Greenwich,
Connecticut, on Tuesday, May 18, 2010 at 1:00 p.m. and
at any adjournment thereof. On April 8, 2010, we began
mailing to stockholders of record either a Notice of Internet
Availability of Proxy Materials (“Notice”) or this
proxy statement and proxy card and the Company’s Annual
Report for the fiscal year ended December 31, 2009.
Why am
I receiving this proxy statement and proxy card?
You have received these proxy materials because our Board of
Directors is soliciting your proxy to vote your shares of our
common stock at the Annual Meeting. This proxy statement
describes issues on which we would like you to vote at our
Annual Meeting. This proxy statement and annual report also give
you information on these issues so that you can make an informed
decision.
Our Board of Directors has made this proxy statement, proxy card
and annual report available to you on the Internet because you
own shares of W. R. Berkley Corporation common stock, in
addition to delivering printed versions of this proxy statement,
proxy card and the annual report to certain stockholders by mail.
When you vote by using the Internet, by telephone or, if you
received your proxy card by mail, by dating, signing and
returning the proxy card, you appoint Eugene G. Ballard and Ira
S. Lederman, and either of them, as your representatives at the
Annual Meeting. They will vote your shares at the Annual Meeting
as you have instructed them or, if an issue that is not on the
proxy card comes up for vote, in accordance with their best
judgment. This way, your shares will be voted whether or not you
attend the Annual Meeting. Even if you plan to attend the Annual
Meeting, we encourage you to vote in advance by using the
Internet, by telephone or (if you received your proxy card by
mail) by dating, signing and returning your proxy card.
Why
did I receive a Notice of Internet Availability of Proxy
Materials in the mail instead of a printed set of proxy
materials?
Pursuant to rules adopted by the Securities and Exchange
Commission, we are permitted to furnish our proxy materials over
the Internet to our stockholders by delivering a Notice in the
mail. We are sending the Notice to certain record stockholders.
If you received a Notice by mail, you will not receive a printed
copy of the proxy materials in the mail. Instead, the Notice
instructs you on how to access and review the proxy statement
and annual report over the Internet at
www.proxyvote.com. The Notice also instructs you
on how you may submit your proxy over the Internet. If you
received a Notice by mail and would like to receive a printed
copy of our proxy materials, you should follow the instructions
for requesting these materials contained in the Notice.
Stockholders who receive a
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printed set of proxy materials will not receive the Notice, but
may still access our proxy materials and submit their proxies
over the Internet at www.proxyvote.com.
If you received a paper copy of this proxy statement by mail and
you wish to receive a notice of availability of next year’s
proxy statement either in paper form or electronically via
e-mail, you
can elect to receive a paper notice of availability by mail or
an e-mail
message that will provide a link to these documents on our
website. By opting to receive the notice of availability and
accessing your proxy materials online, you will save the Company
the cost of producing and mailing documents to you, reduce the
amount of mail you receive and help preserve environmental
resources. Registered stockholders may elect to receive
electronic proxy and annual report access or a paper notice of
availability for future annual meetings by registering online at
www.proxyvote.com. If you received electronic or
paper notice of availability of these proxy materials and wish
to receive paper delivery of a full set of future proxy
materials, you may do so at the same location. Beneficial or
“street name” stockholders who wish to elect one of
these options may also do so at www.proxyvote.com.
Who is
entitled to vote?
Holders of our common stock at the close of business on
March 23, 2010 are entitled to vote. March 23, 2010 is
referred to as the record date.
In accordance with Delaware law, a list of stockholders entitled
to vote at the meeting will be available at the place of the
Annual Meeting on May 18, 2010 and will be accessible for
ten days prior to the meeting at our principal place of
business, 475 Steamboat Road, Greenwich, Connecticut, between
the hours of 9:00 a.m. and 5:00 p.m.
How do
I vote?
Stockholders of record may vote by using the Internet, by
telephone or (if you received a proxy card by mail) by mail as
described below. Stockholders also may attend the meeting and
vote in person. If you hold shares of our common stock through a
bank or broker, please refer to your proxy card, Notice or other
information forwarded by your bank or broker to see which voting
options are available to you.
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You may vote by using the Internet. The
address of the website for Internet voting is
www.proxyvote.com. Internet voting is available
24 hours a day and will be accessible until 11:59 p.m.
Eastern Time on May 17, 2010. Easy to follow instructions
allow you to vote your shares and confirm that your instructions
have been properly recorded.
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You may vote by telephone. The toll-free
telephone number is noted on your proxy card. Telephone voting
is available 24 hours a day and will be accessible until
11:59 p.m. Eastern Time on May 17, 2010. Easy to
follow voice prompts allow you to vote your shares and confirm
that your instructions have been properly recorded.
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You may vote by mail. If you received a proxy
card by mail and choose to vote by mail, simply mark your proxy
card, date and sign it, and return it in the postage-paid
envelope.
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The method you use to vote will not limit your right to vote at
the Annual Meeting if you decide to attend in person. Written
ballots will be passed out to anyone who wants to vote at the
Annual
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Meeting. If you hold your shares in “street name,” you
must obtain a proxy, executed in your favor, from the holder of
record to be able to vote in person at the Annual Meeting.
What
if I change my mind after I return my proxy?
You may revoke your proxy and change your vote at any time prior
to voting of the shares represented by your proxy. You may do
this by:
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submitting a subsequent proxy by using the Internet, by
telephone or by mail with a later date;
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sending written notice of revocation to our Corporate Secretary
at 475 Steamboat Road, Greenwich, Connecticut 06830; or
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voting in person at the Annual Meeting.
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Attendance at the Annual Meeting will not by itself revoke a
proxy.
How
are the votes counted?
Votes cast by proxy will be tabulated by Broadridge Financial
Solutions, Inc. Votes cast in person at the Annual Meeting will
be tabulated by the inspectors of election appointed at the
Annual Meeting, who will also determine whether a quorum is
present.
How
many votes do you need to hold the Annual Meeting?
The holders of a majority of our common stock outstanding and
entitled to vote who are present either in person or represented
by proxy constitute a quorum for the Annual Meeting. The
election inspector will treat abstentions and “broker
non-votes” as shares that are present and entitled to vote
for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of any matter
submitted. A “broker non-vote” is when a broker
indicates on a proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter
and has not received instructions from the beneficial owner with
respect to that matter.
On
what items am I voting?
You are being asked to vote on two items:
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the election of four directors nominated by the Board of
Directors and named in the proxy statement to hold office for a
term of three years until the Annual Meeting of Stockholders in
2013 and until their respective successors are duly elected and
qualified; and
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the ratification of the appointment of KPMG LLP as our
independent registered public accountants for the fiscal year
ending December 31, 2010.
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How
may I vote for the nominees for director, and how many votes
must the nominees receive to be elected?
With respect to the election of nominees for director, you may:
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vote FOR the election of the four nominees for director;
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WITHHOLD AUTHORITY to vote for one or more of the nominees and
vote FOR the remaining nominees; or
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WITHHOLD AUTHORITY to vote for the four nominees.
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The four nominees receiving the highest number of affirmative
votes will be elected as directors. If you hold shares of our
common stock through a bank or broker, your bank or broker will
vote your shares for you if you provide instructions on how to
vote the shares. In the absence of instructions, however,
beginning this year, banks and brokers no longer have the
authority to vote your shares for the election of directors.
Accordingly, it is important that you provide voting
instructions to your bank or broker, so that your shares may be
voted in the election of directors.
What
happens if a nominee is unable to serve if
elected?
The persons designated as proxies reserve full discretion to
cast votes for other persons in the event any such nominee is
unable to serve. However, the Board has no reason to believe
that any nominee will be unable to serve if elected. The proxies
cannot be voted for a greater number of persons than the four
named nominees.
How
may I vote for the ratification of the appointment of our
independent registered public accountants, and how many votes
must the proposal receive to pass?
With respect to the proposal to ratify the appointment of our
independent registered public accountants, you may:
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vote FOR the proposal;
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vote AGAINST the proposal; or
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ABSTAIN from voting on the proposal.
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The ratification of the appointment of our independent
registered public accountants must receive the affirmative vote
of a majority of the votes that could be cast at the Annual
Meeting by the holders who are present in person or by proxy to
pass. If you abstain from voting on the proposal, it will have
the same effect as a vote against the proposal.
How
does the Board of Directors recommend that I vote?
The board recommends a vote:
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FOR all four director nominees; and
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FOR the ratification of the appointment of our independent
registered public accountants.
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What
happens if I sign and return my proxy card but do not provide
voting instructions?
If you return a signed card but do not provide voting
instructions, your shares will be voted FOR all four director
nominees and FOR the ratification of the appointment of our
independent registered public accountants.
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Will
my shares be voted if I do not vote by using the Internet, by
telephone or by signing and returning my proxy
card?
If you own shares of our common stock and you do not vote by
using the Internet, by telephone or, if you received a proxy
card by mail, by signing and returning your proxy card, then
your shares will not be voted and will not count in deciding
non-routine matters presented for stockholder consideration at
the Annual Meeting.
If your shares of our common stock are held in street name
through a bank or broker, your bank or broker may vote your
shares under certain limited circumstances if you do not provide
voting instructions before the Annual Meeting, in accordance
with New York Stock Exchange (“NYSE”) rules that
govern the banks and brokers. These circumstances include voting
your shares on “routine matters,” such as the
ratification of the appointment of our independent registered
public accountants described in this proxy statement. With
respect to this proposal, therefore, if you do not vote your
shares, your bank or broker may vote your shares on your behalf
or leave your shares unvoted.
Beginning this year, the election of directors is not considered
a routine matter under NYSE rules relating to voting by banks
and brokers. Accordingly, if a bank or brokerage firm has not
received voting instructions from the beneficial owner of the
shares with respect to the election of directors, the brokerage
firm cannot vote the shares on that matter. These “broker
non-votes” that are represented at the Annual Meeting will
be counted for purposes of establishing a quorum, but not for
determining the number of shares voted for or against the
non-routine matter.
We encourage you to provide instructions to your bank or
brokerage firm by voting your proxy. This action ensures your
shares will be voted at the meeting in accordance with your
wishes.
What
do I need to show to attend the Annual Meeting in
person?
You will need proof of your share ownership (such as a recent
brokerage statement or letter from your broker showing that you
owned shares of W. R. Berkley Corporation common stock as of the
close of business on March 23, 2010) and a form of
photo identification. If you do not have proof of ownership and
valid photo identification, you may not be admitted to the
Annual Meeting.
Who
pays for the solicitation of proxies and how are they
solicited?
Proxies are being solicited on behalf of our Board of Directors.
The expense of the solicitation of the proxies on behalf of the
Board of Directors will be paid by the Company. The Company has
engaged Georgeson Inc. to assist in the solicitation of proxies
from stockholders for a fee estimated at $7,500, plus expenses.
In addition to the use of the mails, proxies may be solicited in
person or by mail, telephone, facsimile or electronic
transmission by regular employees of the Company without
additional compensation, as well as by Georgeson employees. The
Company will reimburse banks, brokers and other custodians,
nominees and fiduciaries for their direct costs in sending the
proxy materials, including the Notice, to the beneficial owners
of the Company’s common stock.
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OUTSTANDING
STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on
March 23, 2010 are entitled to receive notice of and to
vote at the Annual Meeting. The number of shares of voting stock
of the Company outstanding and entitled to vote on that date was
153,177,178 shares of common stock. Each such share of
common stock is entitled to one vote. At March 23, 2010,
executive officers and directors of the Company owned or
controlled approximately 20.8% of the outstanding common stock.
Information as to persons beneficially owning 5% or more of the
common stock may be found under the heading “Principal
Stockholders” below.
Unless otherwise directed in the proxy, the persons named
therein will vote “FOR” the election of the director
nominees listed below and “FOR” the ratification of
the appointment of KPMG LLP as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2010. If a submitted proxy does not specify a
vote for or against a proposal, it will be voted in favor
thereof.
As of the date hereof, the Board of Directors knows of no other
business that will be presented for consideration at the Annual
Meeting. If other business shall properly come before the Annual
Meeting, the persons named in the proxy will vote according to
their best judgment.
ELECTION
OF DIRECTORS
As permitted by Delaware law, the Board of Directors is divided
into three classes, each class having a term of three years.
Each year the term of office of one class expires. This year the
term of a class consisting of four directors expires. The Board
intends that the shares represented by proxy, unless otherwise
indicated therein, will be voted for the election of W. Robert
Berkley, Jr., Ronald E. Blaylock, Mark E. Brockbank and
Mary C. Farrell as directors to hold office for a term of three
years until the Annual Meeting of Stockholders in 2013 and until
their respective successors are duly elected and qualified.
There are no arrangements or understandings between the nominees
for director and any other person pursuant to which the nominees
were selected.
The persons designated as proxies reserve full discretion to
cast votes for other persons in the event any such nominee is
unable to serve. However, the Board has no reason to believe
that any nominee will be unable to serve if elected. The proxies
cannot be voted for a greater number of persons than the four
named nominees.
Following the recommendation of the Nominating and Corporate
Governance Committee, the Board of Directors unanimously
recommends a vote “FOR” all of the nominees for
director.
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The following table sets forth biographical and other
information regarding each nominee and the remaining directors
who will continue in office after the Annual Meeting. Following
each person’s biographical information, certain information
is provided concerning the particular experience,
qualifications, attributes or skills that led the Nominating and
Corporate Governance Committee and the Board of Directors
(together with the qualities described in “Corporate
Governance and Board Matters — Board
Committees — Nominating and Corporate Governance
Committee” below) to determine that each nominee or
continuing director should serve as a director.
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Served as
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Director
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Continuously
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Business Experience During Past 5 Years
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Nominees to Serve in Office Until 2013
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Since/Age
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and Other Information
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W. Robert Berkley, Jr.(1)
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2001
Age 37
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President and Chief Operating Officer of the Company since
November 2009 and Vice Chairman of Berkley International, LLC
since May 2002. Mr. Berkley, Jr. served previously as Executive
Vice President of the Company from August 2005 to November 2009,
Senior Vice President — Specialty Operations of the
Company from January 2003 to August 2005, Senior Vice President
of the Company from January 2002 to January 2003, Vice President
of the Company from May 2000 to January 2002, President of
Berkley International, LLC from January 2001 to May 2002 and
Executive Vice President of Berkley International, LLC from
March 2000 to January 2001. He joined the Company in September
1997. From July 1995 to August 1997, Mr. Berkley, Jr. was
employed in the Corporate Finance Department of
Merrill Lynch Investment Company. Mr. Berkley,
Jr. is also a director of Associated Community Bancorp,
Inc. and its Connecticut Community Bank, N.A. subsidiary;
Interlaken Capital, Inc.; LD Realty Advisors LLC; NCCI Holdings,
Inc.; VaporStream, Incorporated; and W. R. Berkley Corporation
Charitable Foundation; and is a Trustee of Greenwich Hospital.
Mr. Berkley, Jr. is the son of William R. Berkley.
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Key Experience, Qualifications, Attributes or Skills:
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Mr. Berkley, Jr. has been significantly involved with the
Company for most of his career, including working initially at
several of the Company’s operating subsidiaries. His
substantial experience in all areas of the Company’s
operations, as well as his service as Chairman of the Board of
NCCI Holdings, Inc. (the nation’s largest provider of
workers’ compensation and employee injury data and
statistics) and prior investment banking experience, enable him
to bring to the Board insightful, working knowledge of the
Company’s business and the insurance industry.
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Served as
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Director
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Continuously
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Business Experience During Past 5 Years
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Nominees to Serve in Office Until 2013
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Since/Age
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and Other Information
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Ronald E. Blaylock(2)(3)(4)
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2001
Age 50
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Founder and Managing Partner of GenNx360 Capital Partners, a
private equity buy out firm, since 2006. Mr. Blaylock was
the Founder, Chairman and Chief Executive Officer of Blaylock
& Company, Inc., an investment banking firm, and held
senior management positions with PaineWebber Group and Citicorp
before launching Blaylock & Company, Inc. in 1993.
Mr. Blaylock is also a director of CarMax, Inc. and Radio
One, Inc.
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Key Experience, Qualifications, Attributes or Skills:
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Mr. Blaylock’s founding and management of two financial
services companies has provided him with valuable business,
leadership and management experience. As a result, Mr. Blaylock
brings substantial financial expertise to the Board. In
addition, Mr. Blaylock’s experience on the boards of
directors of other public companies enables him to bring other
perspectives and experience to the Board.
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Mark E. Brockbank(2)(5)
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2001
Age 58
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Mr. Brockbank retired from active employment in November 2000.
He served from 1995 to 2000 as Chief Executive of XL Brockbank
Ltd., an underwriting management agency at Lloyd’s of
London. Mr. Brockbank was a founder of the predecessor firm of
XL Brockbank Ltd. and was a director of XL Brockbank Ltd. from
1983 to 2000.
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Key Experience, Qualifications, Attributes or Skills:
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Mr. Brockbank’s service as Chief Executive of XL Brockbank
Ltd., an underwriting management agency at Lloyd’s of
London, provided him with valuable entrepreneurial business,
leadership and management experience, and particular knowledge
of the insurance industry. Mr. Brockbank also brings
significant business acumen to the Board, including a strong
understanding of insurance and reinsurance risk evaluation,
executive compensation and related areas.
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Mary C. Farrell(2)(5)
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2006
Age 60
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Consultant to the financial services industry since 2005.
Retired in July 2005 from UBS, where she served as a Managing
Director, Chief Investment Strategist for UBS Wealth Management
USA and Co-Head of UBS Wealth Management Investment Strategy
& Research Group.
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Key Experience, Qualifications, Attributes or Skills:
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Ms. Farrell’s career in investment banking, including
serving in various leadership roles at UBS, provides valuable
business experience and critical insights regarding investments,
finance and strategic transactions. Ms. Farrell brings
considerable financial expertise to the Board, providing an
understanding of financial statements, corporate finance,
executive compensation and capital markets.
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Served as
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Director
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Continuously
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Business Experience During Past 5 Years
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Directors to Continue in Office Until 2011
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Since/Age
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and Other Information
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Rodney A. Hawes, Jr.(2)(5)
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2004
Age 72
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Mr. Hawes, Jr. is the founder of Insurance Investment
Associates, which has provided investment banking services to
the insurance industry since 1972. Mr. Hawes, Jr. was the
Chairman of the Board and Chief Executive Officer of Life Re
Corporation from 1988 to 1998.
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Key Experience, Qualifications, Attributes or Skills:
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With 10 years of experience as Chairman and Chief Executive
Officer of Life Re Corporation, a leading life reinsurance
company, and over 38 years as an investment banker to the
insurance industry, Mr. Hawes, Jr. has valuable business,
leadership and management experience, including significant
financial acumen, experience in mergers and acquisitions of
insurance companies and executive compensation, and a
longstanding working knowledge of the Company.
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Jack H. Nusbaum(1)(2)(4)
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1967
Age 69
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Senior Partner in the New York law firm of Willkie Farr &
Gallagher LLP, where he has been a partner and had been Chairman
of the firm for more than the last five years. Willkie Farr
& Gallagher LLP is outside counsel to the Company. Mr.
Nusbaum is presently a director of Cowen Group, Inc. and during
the past five years he was a director of Strategic Distribution
Inc. (until April 2007) and The Topps Company, Inc. (until
October 2007).
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Key Experience, Qualifications, Attributes or Skills:
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Mr. Nusbaum brings leadership, extensive legal, regulatory,
financial and other broad-based business experience to the
Board. In addition, Mr. Nusbaum’s service on the
Company’s Board of Directors since its founding affords him
extensive knowledge of the Company’s business, operations
and culture.
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9
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Served as
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Director
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Continuously
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Business Experience During Past 5 Years
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Directors to Continue in Office Until 2011
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Since/Age
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and Other Information
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Mark L. Shapiro(1)(2)(3)(4)
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1974
Age 66
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Since September 1998, Mr. Shapiro has been a private investor.
From July 1997 through August 1998, Mr. Shapiro was a
Senior Consultant to the Export-Import Bank of the United
States. Prior thereto, he was a Managing Director in the
investment banking firm of Schroder & Co. Inc. He is also a
director of Boardwalk Pipeline Partners, LP.
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Key Experience, Qualifications, Attributes or Skills:
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Mr. Shapiro’s career in investment banking and finance
provides valuable broad-based business experience and insights
on the Company’s business. In addition, Mr. Shapiro
brings considerable financial expertise to the Board, providing
an understanding of accounting, financial statements and
corporate finance. In addition, Mr. Shapiro has had a
professional working knowledge of the Company and its operations
since the Company’s initial public offering in 1973 and his
extensive service on the Company’s Board of Directors
affords him a depth of understanding of the Company’s
business, operations and culture.
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Served as
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Director
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Continuously
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Business Experience During Past 5 Years
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Directors to Continue in Office Until 2012
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Since/Age
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and Other Information
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William R. Berkley(1)
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1967
Age 64
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Chairman of the Board and Chief Executive Officer of the Company
since its formation in 1967. He also served as President and
Chief Operating Officer from March 2000 to November 2009 and
held such positions at various times from 1967 to 1995.
Mr. Berkley also serves as Chairman of the Board or
director of a number of public and private companies. These
include Associated Community Bancorp, Inc. and its Connecticut
Community Bank, N.A. subsidiary; Interlaken Capital, Inc.;
American Insurance Association; The First Marblehead
Corporation; VaporStream, Incorporated; and W. R. Berkley
Corporation Charitable Foundation. Mr. Berkley is Vice
Chairman of the Board of Trustees of New York University;
Chairman of the Board of Overseers of The Leonard N. Stern
School of Business of New York University; and a Director of
Georgetown University. Mr. Berkley is the father of W.
Robert Berkley, Jr.
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Served as
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Director
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Continuously
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Business Experience During Past 5 Years
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Directors to Continue in Office Until 2012
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Since/Age
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and Other Information
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Key Experience, Qualifications, Attributes or Skills:
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The founder, Chairman and Chief Executive Officer of Company,
Mr. Berkley is widely regarded as one of the most distinguished
leaders of the insurance industry, including having served as
Chairman of the American Insurance Association (the
country’s leading property-casualty insurance trade
association). Mr. Berkley provides the Company strategic
leadership, bringing to the Board deep and comprehensive
knowledge of, and experience with, the Company and all facets of
the insurance and reinsurance businesses. Mr. Berkley’s
service as both Chairman and Chief Executive Officer of the
Company creates a vital link between management and the Board,
enabling the Board to perform its oversight function with the
benefit of management’s insight on the business. In
addition, Mr. Berkley’s service on the Board provides the
Company with effective, ethical and responsible leadership.
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George G. Daly(2)(3)
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1998
Age 69
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Dean, McDonough School of Business, Georgetown University. From
2002 to October 2005, Dr. Daly was Fingerhut Professor and
Dean Emeritus, Stern School of Business, New York University,
and previously was Dean, Stern School of Business, and Dean
Richard R. West Professor of Business, New York University, for
more than five years. In addition to his academic career,
Dr. Daly served as Chief Economist at the U.S. Office of
Energy Research and Development in 1974. He is also a director
of The First Marblehead Corporation.
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Key Experience, Qualifications, Attributes or Skills:
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Dr. Daly has strong leadership skills, valuable business
acumen and insights on strategy and operations and has served as
Dean of two of the country’s leading business schools. In
addition, Dr. Daly’s years of service on the
Company’s Board of Directors affords him extensive
knowledge of the Company’s business, operations and culture
and his academic career provides the Board with a different
perspective.
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(1) |
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Member of Executive Committee |
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Member of Nominating and Corporate Governance Committee |
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Member of Audit Committee |
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Member of Business Ethics Committee |
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Member of Compensation Committee |
11
EXECUTIVE
OFFICERS
The following provides the name, principal occupation and other
pertinent information concerning the executive officers of the
Company who do not also serve as a director. The executive
officers are elected by the Board of Directors annually and
serve at the pleasure of the Board. There are no arrangements or
understandings between the executive officers and any other
person pursuant to which the executive officers were selected.
The information is provided as of April 8, 2010.
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Name
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Age
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Position
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Eugene G. Ballard
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57
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Senior Vice President — Chief Financial Officer
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Robert P. Cole
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60
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Senior Vice President — Regional Operations
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Kevin H. Ebers
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52
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Senior Vice President — Information Technology
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Robert W. Gosselink
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56
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Senior Vice President — Insurance Risk Management
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Paul J. Hancock
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48
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Senior Vice President — Chief Corporate Actuary
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Robert C. Hewitt
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49
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Senior Vice President — Excess and Surplus Lines
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Gillian James
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44
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Senior Vice President — Enterprise Risk Management
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Peter L. Kamford
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55
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Senior Vice President — Admitted Specialty Lines
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Carol J. LaPunzina
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48
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Senior Vice President — Human Resources
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Ira S. Lederman
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56
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Senior Vice President — General Counsel and Secretary
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C. Fred Madsen
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56
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Senior Vice President — Reinsurance Operations
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James G. Shiel
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50
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Senior Vice President — Investments
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Robert D. Stone
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45
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Senior Vice President — Alternative Markets Operations
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Steven W. Taylor
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50
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Senior Vice President — International
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Richard M. Baio
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41
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Vice President — Treasurer
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Clement P. Patafio
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45
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Vice President — Corporate Controller
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Eugene G. Ballard has been Senior Vice President —
Chief Financial Officer of the Company since June 1, 1999.
He was Treasurer of the Company from June 1999 to May 2009. He
has more than 20 years of experience in the insurance
industry.
Robert P. Cole has been Senior Vice President —
Regional Operations of the Company since January 1999. Prior
thereto, he was Senior Vice President from January 1998 and Vice
President from October 1996. He has been in the insurance and
reinsurance business for more than 30 years.
12
Kevin H. Ebers has been Senior Vice President —
Information Technology of the Company since February 2008. Prior
thereto, he was Vice President — Financial Risk
Management since 2005. He joined the Company in 1979.
Robert W. Gosselink has been Senior Vice President —
Insurance Risk Management of the Company since October 2003 and
has over 30 years of experience in the reinsurance and
insurance industries.
Paul J. Hancock has been Senior Vice President — Chief
Corporate Actuary of the Company since January 2002. He joined
the Company in 1993 and previously served as a Vice President in
the actuarial department.
Robert C. Hewitt has been Senior Vice President —
Excess and Surplus Lines of the Company since January 2006.
Prior thereto, Mr. Hewitt was Senior Vice
President — Alternative Markets Operations from
January 2004, and Senior Vice President — Risk
Management from January 2002. Mr. Hewitt has over
25 years of experience in the reinsurance and insurance
industries.
Gillian James has been Senior Vice President —
Enterprise Risk Management of the Company since December 2009.
She has over 20 years of experience in the insurance and
financial services industry, having served in the United Kingdom
as a senior executive at Gallagher Re and Aon Re, where she
headed the analytic team.
Peter L. Kamford has been Senior Vice President —
Admitted Specialty Lines of the Company since January 2006.
Prior to joining the Company, he had over 25 years of
experience in property casualty insurance and reinsurance with
Guy Carpenter & Company, where he was a Managing
Director.
Carol J. LaPunzina has been Senior Vice President —
Human Resources of the Company since September 2009. She has
over 23 years of experience in the insurance and
reinsurance industry and began her career with the Company more
than 11 years ago. From 2004 to 2010, she served as senior
vice president, general counsel and secretary of Berkley
Insurance Company, and prior to joining the Company she was an
associate attorney at a private law firm in New York.
Ira S. Lederman has been Senior Vice President since January
1997 and General Counsel and Corporate Secretary of the Company
since November 2001. Additionally, he has been General Counsel
of Berkley International, LLC since January 1998. He joined the
Company in 1983.
C. Fred Madsen has been Senior Vice President —
Reinsurance Operations of the Company since July 2006. Before he
joined the Company, Mr. Madsen was Executive Vice President
of Benfield, concentrating on the specialty insurance
marketplace, and he has more than 30 years of experience in
the property and casualty insurance industry.
James G. Shiel has been Senior Vice President —
Investments of the Company since January 1997. Prior thereto, he
was Vice President — Investments of the Company from
January 1992. Since February 1994, Mr. Shiel has been
President of Berkley Dean & Company, Inc., a
subsidiary of the Company, which he joined in 1987.
Robert D. Stone has been Senior Vice President —
Alternative Markets Operations of the Company since January
2006. Previously, he was the Managing Director of Berkley
Capital, LLC from its formation in 2002. Mr. Stone has over
20 years of experience in the financial services industry.
13
Steven W. Taylor has been Senior Vice President —
International of the Company since December 2007.
Previously, he was Business Development Officer at Gallagher Re
in the United Kingdom from 2004 and served at Benfield for more
than 20 years.
Richard M. Baio has been Vice President — Treasurer of
the Company since May 2009. He has over 19 years of
experience in the insurance and financial services industry,
having served most recently as a director in Merrill
Lynch & Co.’s financial institutions investment
banking group, where he specialized in insurance company
advisory, financing, merger and acquisition transactions.
Previously, he spent a significant part of his career in public
accounting advising the insurance industry as a partner in
Ernst & Young’s insurance practice.
Clement P. Patafio has been Vice President — Corporate
Controller of the Company since January 1997. Prior thereto, he
was Assistant Vice President — Corporate Controller
from July 1994 and Assistant Controller from May 1993.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Our Board of Directors is committed to sound and effective
corporate governance practices. Accordingly, our Board has
adopted written Corporate Governance Guidelines, which address,
among other things, (1) director qualification (including
independence) standards, (2) director responsibilities,
(3) director access to management and, as necessary and
appropriate, independent advisors, (4) director
compensation, (5) director orientation and continuing
education, (6) management succession, and (7) annual
performance evaluation of the Board.
The Board has standing committees including: the Audit
Committee, Compensation Committee, and Nominating and Corporate
Governance Committee. Each of these committees has a written
charter. Our Corporate Governance Guidelines and the charters
for each of these standing committees are available on our
website at www.wrberkley.com.
The Board is currently composed of nine directors, all of whom,
other than Messrs. William R. Berkley and W. Robert
Berkley, Jr., have been determined by the Board to be
independent in accordance with applicable New York Stock
Exchange (“NYSE”) corporate governance rules and not
to have a material relationship with the Company which would
impair their independence from management or otherwise
compromise their ability to act as an independent director.
In making its determination with respect to Mr. Nusbaum,
the Board broadly considered the relevant facts and
circumstances of Mr. Nusbaum’s business and personal
relationships with William R. Berkley, including (1) that
Mr. Nusbaum is a Senior Partner in the New York law firm of
Willkie Farr & Gallagher LLP (“Willkie”),
which serves as legal counsel to the Company, and
(2) Mr. Nusbaum’s long service on the Board of
Directors of the Company, his previous service on the board of
directors of other companies affiliated with Mr. Berkley,
and his personal relationship with Mr. Berkley over such
time.
The Board previously unanimously determined that
Mr. Nusbaum be classified as an independent director, based
on (1) the relative insignificance of the Company’s
annual legal fees paid to Willkie as a percentage of
Willkie’s total annual revenue (including that such fees
fall below the NYSE’s materiality threshold);
(2) Mr. Nusbaum’s reputation and professional
background evidencing his independent nature, and particularly
Mr. Nusbaum’s history of acting independently of the
14
Company’s management; and (3) Mr. Nusbaum’s
personal financial substance and lack of economic dependence on
Mr. Berkley and the Company. The Board also noted that
Mr. Nusbaum did not have any transaction or other
relationship that violated the specific independence tests
described in Section 303A.02(b) of the NYSE rules.
The Board held four meetings during 2009. No director attended
fewer than 75% of the total number of meetings of the Board and
all committees on which he or she served. The Company encourages
its directors to attend its Annual Meeting of Stockholders, and,
last year, seven of the directors were in attendance at the
Annual Meeting.
Board
Committees
Audit Committee. The Audit Committee is
appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the
Company, (2) the independent auditors’ qualifications
and independence, (3) the performance of the Company’s
internal audit function and independent auditors, and
(4) compliance by the Company with legal and regulatory
requirements. The Audit Committee has also adopted procedures to
receive, retain and treat any good faith complaints received
regarding accounting, internal accounting controls or auditing
matters and provide for the anonymous, confidential submission
of concerns regarding these matters.
The Audit Committee was composed of Messrs. Shapiro,
Blaylock and Daly during 2009. Each member of the Audit
Committee is independent under the rules of the Securities and
Exchange Commission (“SEC”) and the NYSE.
Mr. Shapiro is the current Chair of the Audit Committee.
The Board has identified Mr. Shapiro as a current member of
the Audit Committee who meets the definition of an “audit
committee financial expert” established by the SEC. During
2009, the Audit Committee held nine meetings.
The Audit Committee has determined to engage KPMG LLP as the
Company’s independent registered public accounting firm for
fiscal year 2010 and is recommending that our stockholders
ratify this appointment at our Annual Meeting. The report of our
Audit Committee is found on page 45 of this proxy statement.
Compensation Committee. The
Compensation Committee has overall responsibility for
discharging the Board’s responsibilities relating to the
compensation of the Company’s senior executive officers and
directors.
During 2009, the Compensation Committee was composed of
Ms. Farrell and Messrs. Philip J. Ablove, Brockbank,
and Hawes, Jr. until Mr. Ablove’s retirement on
May 19, 2009, and was composed of Ms. Farrell and
Messrs. Brockbank and Hawes, Jr. thereafter. Each
member of the Compensation Committee is independent under the
rules of the NYSE. Mr. Hawes, Jr. is the current Chair
of the Committee. During 2009, the Compensation Committee held
seven meetings. The report of our Compensation Committee on
executive compensation is found on page 34 of this proxy
statement.
The Compensation Committee retained the services of an external
compensation consultant, Hewitt Associates. After 2009 year
end, but prior to the date of filing of this proxy statement,
Hewitt Associates spun off a portion of its executive
compensation practice into a separate, entirely independent
entity named Meridian Compensation Partners, LLC
(“Meridian”). To maintain consistent process and
representation, the Compensation Committee has retained Meridian
going forward as
15
its independent executive compensation consultant. The mandate
of the compensation consultant is to serve the Company and work
for the Compensation Committee in its review of executive and
director compensation practices, including the competitiveness
of pay levels, executive compensation design issues, market
trends, and technical considerations. The nature and scope of
services rendered by the compensation consultant on the
Compensation Committee’s behalf is described below:
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•
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competitive market pay analyses, including proxy data studies,
Board of Director pay studies, and market trends;
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•
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ongoing support with regard to the latest relevant regulatory,
technical,
and/or
accounting considerations impacting compensation and benefit
programs;
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•
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assistance with the redesign of any compensation or benefit
programs, if desired/needed; and
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•
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preparation for and attendance at selected Compensation
Committee meetings.
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The Compensation Committee did not direct the external
compensation consultant to perform the above services in any
particular manner or under any particular method. The
Compensation Committee has the final authority to hire and
terminate the consultant and the Compensation Committee
evaluates the consultant periodically. The Company does not
engage Meridian for other services.
Nominating and Corporate Governance
Committee. The Nominating and Corporate
Governance Committee was formed to assist the Board in
(1) identifying individuals qualified to become members of
the Board (consistent with criteria approved by the Board),
(2) recommending that the Board select the director
nominees for the next annual meeting of stockholders or for
other vacancies on the Board, (3) overseeing the evaluation
of the Board and management, (4) reviewing the corporate
governance guidelines and the corporate code of ethics, and
(5) generally advising the Board on corporate governance
and related matters. Our Corporate Governance Guidelines address
director qualification standards.
The Nominating and Corporate Governance Committee will consider
qualified director nominees recommended by stockholders.
Nominations for consideration by the Nominating and Corporate
Governance Committee, together with a description of his or her
qualifications and other relevant information, should be sent to
the attention of the General Counsel,
c/o W.
R. Berkley Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06830. Stockholders may also follow the nomination
procedures described under “Stockholder Nominations for
Board Membership and Other Proposals for 2011 Annual
Meeting” below.
The Company’s Corporate Governance Guidelines set forth
certain qualifications and specific qualities that candidates
should possess. In accordance with the Guidelines, the
Committee, in assessing potential candidates, considers their
independence, business, strategic and financial skills and other
experience in the context of the needs of the Board of Directors
as a whole, as well as a director’s service on the boards
of other public companies. The Guidelines further state that
directors should: (1) bring to the Company a range of
experience, knowledge and judgment; (2) have relevant
business or other appropriate experience; (3) maintain an
acceptable level of attendance, preparedness and participation
with respect to meetings of the Board and its committees; and
(4) demonstrate competence in one or more of the following
areas: accounting or finance, business or management experience,
insurance or investment industry knowledge, crisis management,
or leadership and
16
strategic planning. In identifying and recommending director
nominees, the Committee members may take into account such
factors as they determine appropriate, including any
recommendations made by the Company’s Chief Executive
Officer. Due consideration will be given to assessing the
qualifications of potential nominees and any potential conflicts
with the Company’s interests. The Committee will also
assess the contributions of the Company’s incumbent
directors in connection with their potential re-nomination.
The Committee does not have a formal policy with regard to the
consideration of diversity in identifying director nominees. In
accordance with the Guidelines, when considering the overall
composition of the Board, the Committee seeks a diverse and
appropriate balance of members who have the experiences,
qualifications, attributes or skills necessary to oversee a
publicly traded, financially complex, growth oriented,
international organization that operates in multiple regulatory
environments. The Committee seeks directors with experience in a
variety of professional disciplines and business ventures who
can provide diverse perspectives on the Company’s
operations. The Committee evaluates the types of backgrounds
that are needed to strengthen and balance the Board based on the
foregoing factors and nominates candidates to fill vacancies
accordingly.
The Nominating and Corporate Governance Committee is currently
composed of Messrs. Blaylock, Brockbank, Daly,
Hawes, Jr., Nusbaum and Shapiro, and Ms. Farrell, all
of whom are considered independent under the rules of the NYSE.
The Nominating and Corporate Governance Committee held two
meetings during 2009.
Other Committees. During 2009, the
Board had two other standing committees in addition to the
committees set forth above: the Executive Committee and the
Business Ethics Committee.
The Executive Committee is authorized to act on behalf of the
Board during periods between Board meetings. During 2009, the
Executive Committee was composed of Messrs. Berkley,
Berkley, Jr., Nusbaum and Shapiro. During 2009, the
Executive Committee acted once by unanimous written consent.
The Business Ethics Committee, which during 2009 was composed of
Messrs. Blaylock, Nusbaum and Shapiro, administers the
Company-wide business ethics program. The Business Ethics
Committee reviews certain disclosures made by Company employees
and directors under the Company’s Statement of Business
Ethics and Statement of Business Ethics for the Board of
Directors, determines if any issue presented raises an ethics
concern and takes any appropriate action. During 2009, the
Business Ethics Committee held two meetings.
Additional
Information Regarding the Board
Board Leadership Structure. The Board
of Directors has not separated the positions of Chairman of the
Board and Chief Executive Officer of the Company, as reflected
in the Company’s By-Laws. The Board does not believe that
the separation of the positions is necessary or desirable in the
Company’s present circumstances. The Board believes that
current leadership of the Company has been effective in
overseeing stockholders’ long-term interests.
Mr. Berkley founded the Company in 1967 and has been its
Chairman of the Board and Chief Executive Officer since that
time, a period of over forty years. Under
Mr. Berkley’s strategic leadership, the Company has
grown significantly, with Mr. Berkley being recognized for
his extensive
17
experience in and leadership of the insurance and reinsurance
industries. Risk oversight is an especially complex issue for
property and casualty insurance companies, and the Board
believes that the Company’s current leadership structure
has served this function well. Given Mr. Berkley’s
extensive knowledge of the Company and its operations, employees
and culture, his significant ownership stake and the strategic
leadership that he brings to the Board, as well as his active
involvement in the Company’s
day-to-day
business, the Board believes that it is appropriate that
Mr. Berkley serve as both Chairman of the Board and Chief
Executive Officer of the Company. The Board regularly reviews
and considers the Board leadership structure.
The Board does not have a lead director. The Board believes that
its current leadership structure has historically served the
Company well and continues to do so, by facilitating
communication between the Board and senior management of the
Company as well as Board oversight of the Company’s
business and affairs. However, as described in
“— Communications with Non-Management Directors;
Executive Sessions” below, the Board’s independent
directors meet regularly in executive session, which serves to
promote open discussion among these directors. The presiding
director at these executive sessions rotates among the Chairman
of the Audit Committee, the Chairman of the Compensation
Committee and the non-management member of the Executive
Committee who does not already chair another committee, a
process, the Board believes, provides different directors the
opportunity to guide the Board’s agenda and facilitates
collegiality among Board members.
Board Role in Risk Oversight. Managing
risk is a critical element of any property casualty insurance
business, such as the Company. The Board believes that risk
oversight is a responsibility of the entire Board, and it does
not look to any individual director or committee to lead it in
discharging this responsibility. Risk management is one of the
core responsibilities of the Chief Executive Officer and is a
critical responsibility of every senior officer of the Company
and its operating units.
The strategic management of risk in an insurance business, such
as the Company, is a multi-level proposition. The Board has an
active role, both as a whole and also at the committee level, in
risk oversight. The Board and its committees receive periodic
updates from members of senior management on areas of material
risk to the Company, including operational, financial,
strategic, competitive, reputational, legal and regulatory
risks. Among other things, the Board as a whole oversees
management’s assessment of business risks relating to the
Company’s insurance operations and investment portfolio.
At the committee level, our Audit Committee regularly reviews
our financial statements, financial and other internal controls,
and remediation of material weaknesses and significant
deficiencies in internal controls, if any. Our Compensation
Committee regularly reviews our executive compensation policies
and practices and the risks associated with each. Our Nominating
and Corporate Governance Committee considers issues associated
with the independence of our Board, corporate governance and
potential conflicts of interest. While each committee is
responsible for evaluating certain risks and risk oversight, the
entire Board of Directors is regularly informed of risks
relevant to the Company’s business, as described above.
Risk management is a core tenet of the Company, with the concept
of achieving appropriate risk-adjusted returns in our business a
driving principle since the Company was founded. As a key
element of their duties, our senior executives are responsible
for risks and potential risks as they
18
arise from day to day in their various operational areas. In
recognition of the critical nature of risk management, during
2009 the Company created a new senior position, reporting
directly to the Chairman and Chief Executive Officer, which is
responsible for enterprise risk management. In addition, our
internal audit function reports to our Audit Committee on a
quarterly basis, and more frequently to the extent necessary.
Our independent outside auditors regularly identify and discuss
with our Audit Committee risks and related mitigation measures
that may arise during their regular reviews of the
Company’s financial statements, audit work and executive
compensation policies and practices, as applicable.
Compensation
Committee Interlocks and Insider Participation
During fiscal year 2009, Ms. Farrell and
Messrs. Ablove, Brockbank, and Hawes, Jr. served on
the Compensation Committee until Mr. Ablove’s
retirement on May 19, 2009, and was composed of
Ms. Farrell and Messrs. Brockbank, and Hawes, Jr.
thereafter. No member of the Compensation Committee was, during
fiscal year 2009, an officer or employee of the Company or was
formerly an officer of the Company (except for Mr. Ablove,
who was Senior Vice President and Chief Financial Officer of the
Company from July 1973 to April 1983), or had any relationship
requiring disclosure by the Company as a related party
transaction under Item 404 of
Regulation S-K.
No executive officer of the Company served on any board of
directors or compensation committee of any other company for
which any of the Company’s directors served as an executive
officer at any time during fiscal year 2009.
Code of
Ethics
We have had a Statement of Business Ethics in place for many
years. This statement applies to all of our officers and
employees. It is a statement of our high standards for ethical
behavior and legal compliance, and governs the manner in which
we conduct our business. This Statement of Business Ethics
covers all areas of professional conduct, including employment
policies, conflicts of interest, anti-competitive practices,
intellectual property and the protection of confidential
information, as well as adherence to the laws and regulations
applicable to the conduct of our business. We have also adopted
a Statement of Business Ethics for the Board of Directors.
We have adopted a Code of Ethics for Senior Financial Officers.
This Code of Ethics, which applies to our Chief Executive
Officer, Chief Financial Officer and Controller, addresses the
ethical handling of conflicts of interest, the accuracy and
timeliness of SEC disclosure and other public communications and
compliance with law.
Copies of our Statement of Business Ethics, Statement of
Business Ethics for the Board of Directors and Code of Ethics
for Senior Financial Officers can be found on our website at
www.wrberkley.com. We intend to disclose amendments to
these procedures, and waivers of these policies for executive
officers and directors, on our website.
Communications
with Non-Management Directors; Executive Sessions
A stockholder who has an interest in communicating with
management or non-management members of the Board of Directors
may do so by directing the communication to the General Counsel.
Information about the Company, including with respect to its
corporate governance policies and
19
copies of its SEC filings, is available on our website at
www.wrberkley.com. Our filings with the SEC are also
available on the SEC’s website at www.sec.gov.
Persons who desire to communicate with the non-management
directors should send their correspondence addressed to the
attention of the General Counsel,
c/o W.
R. Berkley Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06830. The General Counsel will provide a summary of
all appropriate communications to the addressed non-management
directors and will provide a complete copy of such
communications upon the request of the addressed director.
In accordance with applicable NYSE rules, the independent
directors meet regularly in executive session. The presiding
director at these executive sessions rotates among the Chairman
of the Audit Committee, the Chairman of the Compensation
Committee and the non-management member of the Executive
Committee who does not already chair another committee.
PRINCIPAL
STOCKHOLDERS
The following table sets forth as of March 23, 2010 (except
as otherwise noted below) those persons known by the Company to
be the beneficial owners of more than 5% of the Company’s
common stock:
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Amount and Nature
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of Beneficial
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Percent
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Name and Address of Beneficial Owner
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Ownership
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of Class
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William R. Berkley
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27,718,358
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(1)
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18.1
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%
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475 Steamboat Road
Greenwich, CT 06830
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Goldman Sachs Asset Management
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8,671,548
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(2)
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5.5
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%(4)
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32 Old Slip
New York, NY 10005
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BlackRock, Inc.
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8,148,552
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(3)
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5.2
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%(4)
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40 East
52nd
Street
New York, NY 10022
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(1)
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Includes 4,363,368 shares of
common stock held by Mr. Berkley, 10,635,016 shares of
common stock and 5,981,608 shares of common stock held in
separate limited liability companies of which Mr. Berkley
is the sole member, 2,700,000 shares of common stock held
by certain trusts of which Mr. Berkley is the sole trustee,
2,404,688 shares of common stock which are subject to
currently exercisable stock options, 1,573,125 shares of
common stock underlying restricted stock units (658,125 of which
have vested (the receipt of which has been deferred), 315,000 of
which vest on December 5, 2010, 300,000 which vest on
December 17, 2012 and 300,000 which vest on March 2,
2015), and 60,553 shares held by Mr. Berkley’s
wife, as to which shares he disclaims beneficial ownership.
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(2)
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Information as of December 31,
2009 based on a Schedule 13G, dated February 12, 2010,
filed with the Securities and Exchange Commission on behalf of
Goldman Sachs Asset Management, L.P. and GS Investment
Strategies, LLC (together, “GSAM”). The
Schedule 13G discloses that GSAM had shared voting power as
to 8,570,642 shares and shared dispositive power as to all
8,671,548 shares.
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(3)
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Information as of December 31,
2009 based on a Schedule 13G, dated January 20, 2010,
filed with the Securities and Exchange Commission on behalf of
BlackRock, Inc. (“BlackRock”). The Schedule 13G
discloses that BlackRock had sole voting power and sole
dispositive power as to all 8,148,552 shares.
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(4)
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The percent of class shown was
based on the shares of common stock reported on the
Schedule 13G and the total number of shares outstanding as
of December 31, 2009. Assuming the number of shares
beneficially owned by this holder did not change, the percent of
class based on the shares of common stock outstanding as of
March 23, 2010 is 5.7% and 5.3%, respectively.
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20
The following table sets forth information as of March 23,
2010 regarding ownership by all directors and executive officers
of the Company, as a group, and each director and each executive
officer named in the Summary Compensation Table, individually,
of the Company’s common stock. Except as described in the
footnotes below, all amounts reflected in the table represent
shares the beneficial owners of which have sole voting and
investment power.
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Amount and Nature of
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Percent
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Name of Beneficial Owner
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Beneficial Ownership
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of Class
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All directors and executive officers as a group (25 persons)
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31,848,008
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(1)(2)(3)(4)
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20.8
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%
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Eugene G. Ballard
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274,486
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(2)
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*
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William R. Berkley
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27,718,358
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(1)(2)
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18.1
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%
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W. Robert Berkley, Jr.
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1,243,385
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(2)
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*
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Ronald E. Blaylock
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12,785
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(5)
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*
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Mark E. Brockbank
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608,606
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(6)
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*
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George G. Daly
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20,825
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*
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Mary C. Farrell
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9,000
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*
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Rodney A. Hawes, Jr.
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14,500
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*
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Ira S. Lederman
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339,401
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(2)(3)
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*
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Jack H. Nusbaum
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68,827
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*
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Mark L. Shapiro
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27,833
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(7)
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*
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James G. Shiel
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291,209
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(2)
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*
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*
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Less than 1%.
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(1)
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Includes 10,635,016 shares of
common stock and 5,981,608 shares of common stock held in
separate limited liability companies of which Mr. Berkley
is the sole member, 2,700,000 shares of common stock held
by certain trusts of which Mr. Berkley is the sole trustee
and 60,553 shares held by Mr. Berkley’s wife, as
to which shares he disclaims beneficial ownership. Of the
27,718,358 shares, 17,637,558 shares are pledged as
security.
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(2)
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The amounts shown for Messrs.
Berkley, Berkley, Jr., Lederman, Ballard and Shiel include
shares of common stock which are subject to stock options that
are either currently exercisable or exercisable within sixty
days of March 23, 2010 and shares of common stock
underlying restricted stock units (RSUs) in the following share
amounts for each individual:
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Vested RSUs
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Name
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Options
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(Receipt Deferred)
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Unvested RSUs
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William R. Berkley
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2,404,688
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658,125
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915,000
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W. Robert Berkley, Jr.
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708,754
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56,250
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390,000
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Ira S. Lederman
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56,954
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56,250
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72,500
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Eugene G. Ballard
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75,940
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56,250
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72,500
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James G. Shiel
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63,282
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43,313
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72,500
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21
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The unvested RSUs for the named individuals are scheduled to
vest as follows: |
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Vesting on
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Vesting on
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Vesting on
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December 5,
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December 17,
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March 2,
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Name
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2010
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2012
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2015
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William R. Berkley
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315,000
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300,000
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300,000
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W. Robert Berkley, Jr.
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90,000
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150,000
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150,000
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Ira S. Lederman
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22,500
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25,000
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25,000
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Eugene G. Ballard
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22,500
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25,000
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25,000
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James G. Shiel
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22,500
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25,000
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25,000
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(3)
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The amount shown for
Mr. Lederman includes 6,102 shares of common stock
held by members of his immediate family sharing the same
household.
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(4)
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The amounts shown for all directors
and executive officers as a group include an aggregate of
3,634,024 shares of common stock which are subject to stock
options that are either currently exercisable or are exercisable
within sixty days of March 23, 2010 and are held by
executive officers of the Company, 1,981,000 shares of
common stock underlying RSUs, which are subject to forfeiture
until vested, and 23,151 shares of common stock which are
held by executive officers under the Company’s Profit
Sharing Plan. Of the 31,848,008 shares,
17,764,164 shares are pledged as security.
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(5)
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Of the 12,785 shares,
5,000 shares are pledged as security.
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(6)
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Includes 603,106 shares held
in a corporation wholly owned by Mr. Brockbank.
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(7)
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Includes 22,333 shares held in
a trust.
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The Company knows of no arrangements, including any pledge by
any person of securities of the Company, the operation of which
may at a subsequent date result in a change of control of the
Company. Under applicable Insurance Holding Company Acts in
various states, a potential owner cannot exercise voting control
over an amount in excess of 10% of the Company’s
outstanding voting securities (5% in the State of Alabama)
without obtaining prior regulatory approval.
TRANSACTIONS
WITH MANAGEMENT AND OTHERS
As described above, the Company has adopted both a Statement of
Business Ethics that applies to all officers and employees and a
Statement of Business Ethics for the Board of Directors, each of
which is administered by the Business Ethics Committee. The
Statements address, among other things, transactions in which
the Company is or will be a party and in which any employee or
director (or members of his or her immediate family, as such
term is defined by the NYSE rules) has a direct or indirect
interest. The Statements require full and timely disclosure of
any such transaction to the Company. Company management
initially determines whether a disclosed transaction by an
employee requires review by the Committee. Based on its
consideration of all of the relevant facts and circumstances,
the Committee decides whether or not to approve such a
transaction and approves only those transactions that are not
contrary to the best interests of the Company. If the Company
becomes aware of an existing transaction which has not been
approved, the matter will be referred to the Committee. The
Committee will evaluate all available options, including
ratification, revision or termination of such transaction.
During 2009, the Company continued to engage the services of
Associated Community Brokers, Inc., an insurance agency owned by
Associated Community Bancorp, Inc. William R. Berkley, the
Company’s Chairman of the Board and Chief Executive
Officer, serves as Chairman of the Board of
22
Directors and is the majority stockholder of Associated
Community Bancorp, Inc., and W. Robert Berkley, Jr., the
Company’s President and Chief Operating Officer, is a
minority stockholder and a director of Associated Community
Bancorp, Inc. During 2009, Associated Community Brokers, Inc.
received commissions (both directly and indirectly) from the
relevant insurance carriers in the amount of $666,410 in
connection with insurance brokerage services provided to the
Company and certain of its subsidiaries. In addition, Associated
Community Brokers, Inc. may place business on behalf of
unrelated third parties with insurance company subsidiaries of
the Company.
Also during 2009, certain of the Company’s employees
performed services for Interlaken Capital, Inc., a company
substantially owned and controlled by William R. Berkley, the
Company’s Chairman of the Board and Chief Executive
Officer. Interlaken separately compensates those Company
employees for such services.
The transactions requiring approval have been previously
approved in accordance with the procedures described above.
Jack H. Nusbaum, a director of the Company, is a Senior Partner
of Willkie Farr & Gallagher LLP, outside counsel to
the Company.
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
The purpose of this Compensation Discussion and Analysis
(“CD&A”) is to provide material information about
the Company’s compensation policies, objectives and
decisions regarding the Company’s Named Executive Officers
(or “NEOs”) and to put into perspective for investors
the numbers and narratives that follow. The following topics are
covered:
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Objectives of the executive compensation program;
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Design of the executive compensation program, including the role
and rationale for each element;
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•
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Use of market and peer group data;
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•
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Executive compensation decisions during the last fiscal year;
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Severance and
change-of-control
benefits; and
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•
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Discussion of risk in relation to executive compensation.
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The CD&A and the tables that follow cover the compensation
paid to the following five NEOs:
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•
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The principal executive officer: William R. Berkley, Chairman of
the Board and Chief Executive Officer (or “CEO”);
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•
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The principal financial officer: Eugene G. Ballard, Senior Vice
President — Chief Financial Officer; and
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23
The three other highest-paid executive officers:
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•
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W. Robert Berkley, Jr., President and Chief Operating
Officer (“COO”) (Mr. Berkley, Jr. had been
Executive Vice President (“EVP”) since August of 2005
and was elected President and COO on November 3, 2009. He
will be referred to as the COO for the remainder of this
document.)
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•
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Ira S. Lederman, Senior Vice President — General
Counsel and Secretary; and
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•
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James G. Shiel, Senior Vice President — Investments.
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Objectives
of the Executive Compensation Program
Our executive compensation program is designed to:
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Attract qualified executive talent;
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Motivate executives to focus on and work toward corporate goals
and appropriately manage risk, thereby fostering enhanced
short-term and long-term financial performance and greater
stockholder value;
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Provide an opportunity for executives to develop a significant
ownership stake in the Company and thus align their interests
with those of the Company’s stockholders;
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Encourage executive retention; and
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Reward executives who contribute to the Company’s
short-term and long-term success through demonstrated and
sustained performance.
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24
Design of
the Executive Compensation Program
The Company’s executive compensation program for the NEOs
includes the following compensation elements.
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Role of the Element and
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Why W. R. Berkley Corporation
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Pay Element
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Uses the Element
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Annual Cash Compensation
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• Required by market practice
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Base Salary
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• Provides a fixed base level of
compensation for NEO services rendered during the year
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Annual Incentive Bonus
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• Representative of market practice
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• Provides focus on annual and long-term
performance goals that are linked to Company success and
stockholder value
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• Motivates and rewards NEOs to achieve
return on capital objectives and individual objectives
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Long-Term Incentive Compensation
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Deferred Restricted Stock Units
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• Increases stock ownership among NEOs
since deferred restricted stock units (“RSUs”) track
the value of and pay out in shares of Company stock
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• Aligns NEOs’ financial interests
with those of Company stockholders during the NEOs’
employment since settlement of RSUs is deferred until separation
from service
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• Retains NEOs through use of overlapping
5-year vesting periods
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• Provides focus on stock price and
dividend yield
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Long-Term Incentive Plan
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• Balances NEO external focus with
internal focus on growth in book value and return on equity
objectives necessary to achieve the growth in book value goals
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• Through Company-wide goal, encourages
teamwork and decision-making to further the long-term best
interests of the Company
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• Encourages retention of NEOs through use
of overlapping 5-year performance periods
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• Allows NEOs to realize a portion of
long-term compensation at established intervals during
employment through potential Long-Term Incentive Plan
(“LTIP”) cash payments
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Benefits and Perquisites
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Benefit Replacement Plan
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• Makes up for Internal Revenue Code
(“IRC”) limits on Company contributions to the
qualified Profit Sharing Plan
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• Treats all employees equally
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• Provides a competitive compensation
element designed to attract and retain NEOs
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Deferred Compensation
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• Allows NEOs to defer receipt of all or
part of their base salary and annual incentive bonus
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• Provides a strong retention feature
through above-market return potential
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• Provides additional cash flow to the
Company in a cost effective manner
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• Provides an attractive tax planning tool
designed to attract and retain NEOs
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Supplemental Benefits
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• Provides supplemental coverage for
officers, including the NEOs, in the areas of life, travel
accident, and long-term disability insurance
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• Provides a competitive compensation
element designed to attract and retain NEOs
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Personal Use of Company Aircraft (CEO
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• Enhances security and personal safety of
the CEO and COO
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and COO only)
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• Enhances productivity of the CEO and COO
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Supplemental Benefits Agreement (CEO only)
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• Rewards the founding CEO for long-term
service to the Company (37 years, at time of entering into
the agreement)
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• Provides competitive retirement income
relative to final average pay for the CEO
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• Provides continued health insurance
benefits and certain perquisites to the CEO after employment ends
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• Provides consideration in exchange for a
noncompete agreement with the CEO
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Other
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Director Fees (CEO & COO only)
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• Compensates NEOs who are also members of the Board
for responsibilities and duties that are separate and distinct
from position as officer
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25
Additional
Design Information
Annual
Incentive Bonus.
2007 Annual Incentive Compensation Plan. In 2006, the
Company adopted, and its stockholders approved, the 2007 Annual
Incentive Compensation Plan. The 2007 Annual Incentive
Compensation Plan is a cash-based annual bonus plan that does
not provide for the payment of equity compensation. During the
fiscal year ended December 31, 2009, the Compensation
Committee granted new awards under this plan to the CEO and the
COO. These awards were each subject to a maximum bonus value.
The awards were designed to ensure that bonus amounts are tax
deductible under IRC Section 162(m). For 2009, the CEO was
eligible for a maximum bonus equal to 4% of the Company’s
pre-tax net income. The COO was eligible for a maximum bonus
equal to 1% of the Company’s pre-tax net income.
Subject to the maximum bonus value, actual bonus amounts were
determined by the Committee, using reasoned negative discretion,
after evaluating individual accomplishments and certain Company
results. Return on equity was the primary factor evaluated for
2009. The Committee also considered earnings per share, combined
ratio (combined ratio is a measure of overall underwriting
profitability where a combined ratio of less than 100 indicates
an underwriting profit), investment income and consistency of
the management team in determining the annual bonus amounts. In
addition, for the COO, the Committee took into account an
initial recommendation from the CEO.
Annual Bonus Program. The annual incentive bonus for each
NEO other than the CEO and the COO is a discretionary bonus
based primarily on financial goals for the Company. Actual bonus
amounts for the other NEOs (Messrs. Ballard, Lederman, and
Shiel) are determined by the CEO and are additionally based on a
subjective evaluation of each individual’s accomplishments
and contributions to the Company’s results. For
Mr. Shiel, consideration is also given to the performance
of the Company’s investment portfolio. These bonus amounts
are reviewed and confirmed by the Committee.
The annual incentive bonus is designed to support the
Company’s objectives by providing a financially attractive
compensation program designed to attract and retain executive
talent, while focusing NEOs on short-term Company goals designed
to contribute to overall Company success and add to shareholder
value.
Long-Term Incentives. The
Company’s long-term incentive program consists of a
combination of equity compensation through awards of RSUs
pursuant to the Company’s 2003 Stock Incentive Plan and
cash compensation through awards of performance units under the
LTIP.
LTIP Awards. In 2009, the Company adopted, and its
stockholders reapproved, the LTIP. The LTIP is a cash-based plan
that does not provide for the payment of equity compensation.
LTIP awards are denominated in performance units that grow in
value based on one or more performance measures selected by the
Committee and are payable, to the extent earned, in cash. The
performance measure for current LTIP awards is the sum of the
year-to-year
increase in book value of Company stock during a five-year
performance period. In order to fully earn the maximum value of
the LTIP award, the Company’s return on equity objectives
need to be met. The performance units pay out in cash at the end
of the performance period. New LTIP units are granted
periodically, generally twice
26
within a five-year period. Awards under the LTIP are designed to
meet the requirements for performance-based compensation under
Section 162(m) of the IRC.
No new LTIP awards were made in 2009.
Restricted Stock Units. RSUs awarded to the NEOs
generally have a five-year vesting period, during which they are
subject to a substantial risk of forfeiture. After vesting,
payment of the RSUs is deferred (on a mandatory basis) until
90 days following the NEO’s separation from service
with the Company (subject to a six-month delay to comply with
Section 409A of the IRC). Grants of RSUs are made
periodically, generally twice within a five-year period.
No new RSU awards were made in 2009 to the NEOs.
The long-term incentive program supports the Company’s
objectives by encouraging the NEOs to continue their employment
with us through multiple overlapping
5-year
vesting cycles for RSUs and LTIP awards. The LTIP and RSU awards
encourage the NEOs to achieve and sustain longer-term Company
performance goals. The RSUs also align the NEOs’ financial
interests with those of the Company’s stockholders and
reward the NEOs in line with stockholders as the value of the
Company’s stock increases.
Deferred Compensation. The Company
maintains the Deferred Compensation Plan for Officers, in which
NEOs are eligible to participate on a voluntary basis. Under the
plan, participants may elect to defer all or a portion of their
base salary, bonus compensation, and excess profit sharing
contribution for any year. Amounts deferred will accrue a
reasonable rate of interest, as determined annually by the
Compensation Committee. At the time of the deferral election,
amounts may be deferred until any date on or before the
officer’s separation from service. At the officer’s
election made at the time of deferral, the Company will pay the
deferred amounts either in a lump sum or in no more than five
annual installments beginning generally within 60 days of a
date which is prior to or on the date of the officer’s
separation from service (subject to a six-month delay to comply
with Section 409A of the IRC). The amounts deferred are not
secured or funded by the Company in any manner. For 2009, the
Compensation Committee agreed to accrue interest on the deferred
amounts at the prime rate of interest reported by JPMorgan
Chase. The Non-Qualified Deferred Compensation table for 2009
and the associated narrative and footnotes provide information
on the amounts deferred by the NEOs under the Plan in 2009,
interest earned on deferred amounts in 2009, and the year-end
balances.
The Deferred Compensation Plan for Officers provides a valuable
tax planning mechanism to the NEOs and thereby supports the
Company’s objectives by providing a compensation program
designed to attract talented executives and retain our current
NEOs. In addition, deferrals under the plan allow for delayed
compensation payments and thereby increased cash flow for the
Company.
Benefit Replacement. The Company
maintains a Benefit Replacement Plan to make up for IRC pay
limits under the Company’s Profit Sharing Plan. Under the
Benefit Replacement Plan, participants receive a potential
annual payment of the amount they would have otherwise received
absent the limitations imposed by the IRC on the Profit Sharing
Plan. This amount is paid in an annual lump sum unless deferred
by the employee under the Deferred Compensation Plan for
Officers. Additional information on the amounts paid under this
plan can be found in the Summary Compensation Table —
All Other Compensation and the associated footnotes.
27
The Benefit Replacement Plan ensures that the full value of the
intended benefits under the Company’s Profit Sharing Plan
is provided to the NEOs and as such supports the Company’s
objectives by providing a compensation program designed to
attract talented executives and retain current NEOs.
Supplemental Benefits Agreement with the
CEO. On August 19, 2004, the Company
entered into a Supplemental Benefits Agreement with
Mr. William Berkley. The agreement was put into place to
recognize the significant contribution that the CEO has made to
the Company’s past and ongoing success. The agreement was
amended in December 2007 to comply with the requirements of
Section 409A of the IRC and further amended in December
2008. The agreement provides the CEO, or spouse, as described
below, with the following benefits:
An annual retirement benefit equal to the greater of $1,000,000
or 50% of Mr. William Berkley’s highest average
three-year compensation over the prior ten fiscal years, but not
exceeding 150% of his average five-year compensation over the
prior five fiscal years;
Continued health insurance coverage (including coverage for his
spouse) for the remainder of his or her life, as applicable;
Continued use of the Company plane and a car and driver for a
period beginning with termination (as defined in the agreement)
and ending with the latest to occur of two years following such
termination, the date he ceases to be Chairman of the Board, or
the date he ceases to provide consulting services to the Company;
Office accommodations and secretarial support; and
Payment of any excise taxes imposed on the CEO under
Section 4999 of the IRC (plus payment of additional taxes
incurred as a result of the Company’s payment of excise
taxes) should any of these benefits trigger such excise taxes.
Mr. William Berkley is entitled to the commencement of
retirement benefits on the earliest to occur of January 2,
2014, his death, and a change of control of the Company. If
Mr. Berkley’s employment terminates prior to the
benefit commencement date, a
make-up
account will be credited monthly with an amount equal to one
twelfth of the annual retirement benefit plus interest. This
make-up
account was added to ensure Mr. Berkley’s benefit is
kept whole for changes required under Section 409A of the
IRC. The balance in the
make-up
account and the commencement of regular payments of the annual
retirement benefit will begin on the benefit commencement date.
Mr. Berkley is entitled to the other benefits as triggered
or when he voluntarily leaves the Company.
In exchange for the benefits outlined above, the agreement
prohibits Mr. Berkley from competing against the Company
for two years following his resignation of employment other than
for “good reason,” during which time Mr. Berkley
has agreed to be available to provide consulting services to the
Company. The decision to provide these benefits was made without
regard to other compensation elements. Likewise, providing these
benefits did not influence compensation levels in other areas.
The Supplemental Benefits Agreement supports the Company’s
objectives by rewarding the CEO for his long service and prior
contributions to the Company’s long-term success and
stockholder value. The agreement also protects the Company from
potential competitive activities following the CEO’s
retirement. Additional detail on this agreement is provided in
the Summary Compensation Table (for
28
the annual accrual value of the retirement benefit), the Pension
Benefits table, and the Description of Potential Post-Employment
Payments section.
Use of
Market and Peer Group Data
The Committee reviews and analyzes market data on total direct
executive compensation annually. Total direct compensation
(defined as salary, annual bonus, and long-term incentive
awards) for the NEOs is compared to that paid to individuals
holding comparable positions at peer companies.
Historically, the Committee reviewed data from two peer groups,
(1) direct competitors in the property and casualty
insurance industry, and (2) organizations with a similar
historical financial performance profile to W. R. Berkley
Corporation. In 2009, the Committee decided to review data from
only the direct competitors, since positions at those companies
are more closely related to those at the W. R. Berkley
Corporation. These direct competitors are shown in the following
chart.
|
|
|
|
•
|
Ace Limited
|
|
|
•
|
Alleghany Corporation
|
|
|
•
|
American Financial Group
|
|
|
•
|
Arch Capital Group Ltd.
|
|
|
•
|
Axis Capital Holdings Limited
|
|
|
•
|
The Chubb Corporation
|
|
|
•
|
CNA Financial Corporation
|
|
|
•
|
Everest Re Group Ltd.
|
|
|
•
|
HCC Insurance Holdings, Inc.
|
|
|
•
|
Markel Corporation
|
|
|
•
|
Old Republic International Corporation
|
|
|
•
|
PartnerRe Ltd.
|
|
|
•
|
The Progressive Corporation
|
|
|
•
|
RenaissanceRe Holdings Ltd.
|
|
|
•
|
Transatlantic Holdings Inc.
|
|
|
•
|
The Travelers Companies, Inc.
|
|
|
•
|
White Mountains Insurance Group Ltd.
|
|
|
•
|
XL Capital Ltd.
|
Among these companies, SAFECO Corp. was removed from the group
used last year due to its acquisition by Liberty Mutual.
Alleghany and Axis Capital were added given their similar
industry focus.
29
Market data is reviewed together with performance data for the
peer companies to determine that total direct compensation paid
is in line with relative performance of the peer companies.
However, market data is only one of many factors considered in
setting future compensation awards as discussed further below.
Executive
Compensation Decisions During the Last Fiscal Year
General Approach. The Company does not
target any particular allocation for base salary, annual
incentive bonus, or long-term incentive compensation as a
percentage of total compensation. Rather, pay decisions for
NEOs, other than the CEO and COO, are based on a reasoned
subjective assessment by the CEO of individual performance and
future potential. For the CEO and COO, pay decisions are made by
the Committee and are based on a reasoned subjective assessment
of Company performance and designed to ensure that compensation
is appropriate based on relative performance.
Other than the CEO, no executive officer plays a role in
determining compensation for the NEOs.
For 2009. This past fiscal year
remained challenging, with many competitors and financial
services organizations continuing to experience significant
volatility and write-downs of asset values. The Company
performed relatively well given the adverse economic
environment, and continued to exceed the long-term performance
of peer companies on many fronts. See the discussion on CEO
bonus for a more detailed analysis of Company performance.
Operationally, the Company added business units and finished the
year with a strong balance sheet. Cash compensation for the NEOs
is down over prior years, reflecting these results, with the
exception of cash compensation for Mr. Shiel, which was up
over 2008.
Base Salary. The CEO has not received a
salary increase since January 1, 2000, since base pay in
excess of the current level is not deductible by the Company for
income tax purposes. At Mr. Berkley, Jr.’s
request, he has not received a salary increase since
January 1, 2007. However, effective January 1, 2010,
his salary was increased to $850,000 reflecting his promotion to
COO of the Company.
Salary actions taken for other NEOs were based on the CEO’s
subjective assessment as outlined below, the NEO’s
contribution to the Company, and retention needs:
|
|
|
|
|
|
|
|
|
Salary Increase
|
|
Rationale
|
|
Mr. Ballard
|
|
|
1.8%
|
|
|
To maintain competitive positioning
|
Mr. Lederman
|
|
|
1.8%
|
|
|
To maintain competitive positioning
|
Mr. Shiel
|
|
|
1.8%
|
|
|
To maintain competitive positioning
|
All base salary changes were effective January 1, 2009.
Annual Incentive Bonus. For
Messrs. Ballard, Lederman, and Shiel, the CEO determined,
and reviewed with the Committee, the 2009 bonus amounts, as
shown in the Summary Compensation Table, based on a reasoned
subjective assessment of Company performance (primarily ROE) and
individual performance. For Mr. Ballard, the CEO reviewed
his management of the financial
30
accounting department as well as management of strategic
accounting and treasury issues related to the Company’s
business. For Mr. Lederman, the CEO reviewed his management
of the legal department and management of the legal
department’s responses to law and regulations as they
relate to the Company’s business. For Mr. Shiel, the
CEO reviewed his management of the investment department. In
addition, for Mr. Shiel, consideration was given to
performance of the Company’s investment portfolio. See the
discussion on CEO bonus for a more detailed analysis of Company
performance. The 2009 bonus award for each of Mr. Ballard
and Mr. Lederman was $325,000, which represented a 4.5%
decline over the prior year. The reduction in bonus amount was
due primarily to Company performance. The 2009 bonus award for
Mr. Shiel was brought back in line with
Messrs. Ballard and Lederman, or $325,000, after having
been reduced by 50% in 2008.
Annual Incentive Bonus Under the
Plan. For 2009, the CEO and COO were
the only participants in the 2007 Annual Incentive Compensation
Plan. For the COO, the CEO made an initial recommendation for a
bonus of $1,100,000 and the Committee approved this amount. The
bonus amount was based on a reasoned subjective assessment by
the CEO and the Committee of Company performance, primarily ROE,
as well as earnings per share, combined ratio, and investment
income. Analysis of the Company’s performance is outlined
below. Consideration was also given to the individual
performance of the COO, including his management of domestic
operations, evaluation and development of growth opportunities
for the Company, and strategic analysis. This bonus amount was
less than the maximum (1% of pre-tax net income, or $3,820,000)
described earlier, and represents an 8% decline from the prior
year bonus amount.
For the CEO, Company performance was a critical factor in
determining the final bonus amount. Using a reasoned subjective
assessment of different measures previously established, the
Committee awarded the CEO a bonus of $6,200,000. The primary
measure considered was ROE. The Committee also considered the
Company’s earnings per share, combined ratio (relative to
the industry), and investment income.
While the measures are listed in order of importance, no
particular allocation was applied to the measures. The Committee
also considered:
|
|
|
|
•
|
Amounts paid in prior years and Company performance in 2009
relative to those prior years; and
|
|
|
•
|
Company performance relative to industry peers.
|
W. R. Berkley Corporation’s financial performance in
2009 was strong considering economic conditions. The following
outlines the Committee’s analysis for the CEO’s bonus
determination:
|
|
|
|
•
|
Return on stockholders’ equity was 10.1% based on net
income, and 14.7% based on operating income (operating income is
a non-GAAP financial measure defined by the Company as net
income excluding income or losses from investment funds and net
investment gains and losses). The Company’s ROE performance
over the past five years was in the top quartile relative to
peers, based on data through the third quarter (which was the
most recent reported data available). 2009 performance is
slightly up from the prior year.
|
|
|
•
|
Combined ratio of 94.2% was 6.4 points better than the
industry’s overall combined ratio.
|
|
|
•
|
Net income was $1.86 per share, which is 15% higher than the
previous year, operating income was $2.69 per share, which is
down from prior year levels by 9%.
|
31
|
|
|
|
•
|
Net investment income, including income (loss) from investment
funds, was $553 million, which was up by 4% over the prior
year.
|
The CEO’s bonus represents an 8% decline from the previous
year, generally consistent with other executive officers of the
Company. The absolute bonus for the CEO reflects the
Committee’s satisfaction with the efforts of the CEO and
actions taken to ensure the Company’s success in years to
come. The amount paid was less than the maximum bonus amount (4%
of pre-tax net income, or $15,280,000) described earlier.
Long-Term Incentives. NEOs did not
receive new LTIP awards in 2009. LTIP awards are generally made
twice over a five-year period and have a five-year performance
term. LTIPs have no value on the date of grant, but are expected
to grow in value based on the growth in book value over the
five-year period. LTIP awards were last granted in March 2008.
During 2008, amendments were made to the outstanding LTIP awards
originally granted in 2006 in order to comply with Internal
Revenue Code Section 409A. Originally, the award could be
paid out as soon as the maximum award value was achieved, or
after five years, whichever occurred earlier. In order to comply
with Section 409A, however, a specific payout date needed
to be set. More than half of the maximum award for the 2006 LTIP
had already been earned as of the end of 2008, and it appeared
likely to achieve early payment. Therefore, the Committee
decided to pay 50% of the maximum value on January 2, 2009.
The balance of the award would be paid after the end of the
five-year performance period. With respect to the NEOs other
than the CFO, an IRS discount factor was applied to the
January 2, 2009 accelerated payment in order to maintain
compliance with Section 162(m) (which ensures the payment
is tax deductible to the Company). The accruals for these
payments have already been reflected in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table over
the prior two years. Actual payments made to the NEOs on
January 2, 2009 were as follows:
|
|
|
|
|
|
|
Accelerated Partial Payment
|
|
|
of 2006 LTIP Award
|
|
Mr. Berkley
|
|
$
|
4,919,812
|
|
Mr. Berkley, Jr.
|
|
|
1,229,953
|
|
Mr. Ballard
|
|
|
500,000
|
|
Mr. Lederman
|
|
|
491,981
|
|
Mr. Shiel
|
|
|
430,484
|
|
Severance
and
Change-of-Control
Benefits
Except as provided for in the CEO’s Supplemental Benefits
Agreement, RSUs that ratably vest upon death or disability and
LTIP awards that become payable upon certain terminations, the
Company does not have any contracts, agreements, plans or
arrangements that provide for severance payments to the NEOs at,
following, or in connection with any termination of employment.
|
|
|
|
•
|
The Supplemental Benefits Agreement, which is described in
greater detail above, provides the CEO with certain benefits
upon death or termination of employment to recognize his
significant contributions to the Company’s success from the
time he founded the Company.
|
|
|
•
|
RSUs held by the NEOs are subject to accelerated ratable vesting
upon death or disability. Ratable vesting of the RSUs is
intended to fairly compensate the NEOs for service to the
Company through the date of their death or disability.
|
32
|
|
|
|
•
|
In the event of the termination of an NEO’s employment on
account of his death, disability, qualified retirement, or his
termination by the Company for a reason other than cause,
subject to the terms and conditions of the LTIP agreements, the
cash value of the LTIP awards will be determined and fixed as of
the end of the fiscal year immediately prior to the fiscal year
in which the termination occurred and paid 90 days
following such termination. This accelerated payment fairly
compensates the NEOs for service to the Company through the
fiscal year just prior to their termination.
|
Upon a Change of Control as described in the various plan
documents:
|
|
|
|
•
|
Benefits under the Supplemental Benefits Agreement become
payable.
|
|
|
•
|
RSUs will become fully vested and settled in full.
|
|
|
•
|
The value of all LTIP awards will be determined and fixed as of
the end of the fiscal year prior to the Change of Control and
paid to the participant within 90 days following the last
day of the performance period.
|
These provisions support the Company’s compensation
objectives by keeping executives focused on delivering strong
results and evaluating potential change of control events from a
neutral perspective. The provisions remove concerns over the
possible personal impact of such events. For additional detail,
see “Executive Compensation — Potential Payments
Upon Termination or Change of Control” below.
Discussion
of Risk and Compensation Plans
There are a number of practices, policies, and incentive design
features that are intended to ensure executives are not
encouraged to take unnecessary or excessive risks. These include:
|
|
|
|
•
|
Multi-year equity vesting and multi-year performance periods.
The LTIP has a
5-year
performance period and the RSUs have a
5-year
vesting requirement. These extended time periods reflect the
longer-term nature of business decisions and align executives
with the longer-term performance of the Company.
|
|
|
•
|
Clawback Policy. The Compensation Committee has approved
recapture provisions for certain misconduct by grantees of RSUs
and LTIPs.
|
|
|
•
|
Stock Ownership. While the Company does not have formal stock
ownership guidelines, stock ownership is generally strongly
encouraged and mandated under the RSU deferral program. The CEO
currently beneficially owns approximately 18% of the
Company’s outstanding common stock. Other NEOs also have
significant beneficial ownership positions (averaging in excess
of 12 times base salary) through outright common stock ownership
and deferred RSU awards.
|
|
|
•
|
Prohibition on Hedging. The Company’s senior officers as
well as the presidents and chief financial officers of the
Company’s subsidiaries are prohibited from hedging and
other derivative transactions with respect to the Company’s
common stock.
|
33
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis shown above.
Based on this review and discussion, the Compensation Committee
recommended to the Board of Directors that this Compensation
Discussion and Analysis be included in this Proxy Statement and
the Annual Report on
Form 10-K
for the year ended December 31, 2009.
Compensation Committee
Rodney A. Hawes, Jr., Chairman
Mark E. Brockbank
Mary C. Farrell
April 6, 2010
The above report of the Compensation Committee shall not be
deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing
under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
34
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth the cash and non-cash
compensation awarded to or earned by the Chairman of the Board
and Chief Executive Officer of the Company, the Chief Financial
Officer of the Company and the three other highest paid
executive officers of the Company whose total compensation
exceeded $100,000 for the last fiscal year.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)
|
|
($)
|
|
William R. Berkley
|
|
|
2009
|
|
|
|
1,000,000
|
|
|
|
—
|
(4)
|
|
|
—
|
|
|
|
8,317,950
|
|
|
|
8,002,244
|
(5)
|
|
|
489,885
|
(6)(7)
|
|
|
17,810,079
|
|
Chairman of the Board
|
|
|
2008
|
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
7,737,000
|
|
|
|
8,880,600
|
|
|
|
668,172
|
|
|
|
390,937
|
|
|
|
18,676,710
|
|
and Chief Executive Officer
|
|
|
2007
|
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,517,200
|
|
|
|
8,392,664
|
|
|
|
404,076
|
|
|
|
23,313,940
|
|
W. Robert Berkley, Jr.
|
|
|
2009
|
|
|
|
700,000
|
|
|
|
—
|
(4)
|
|
|
—
|
|
|
|
1,746,031
|
|
|
|
—
|
|
|
|
251,007
|
(6)(7)
|
|
|
2,697,038
|
|
President and Chief
|
|
|
2008
|
|
|
|
700,000
|
|
|
|
—
|
|
|
|
3,868,500
|
|
|
|
1,832,025
|
|
|
|
—
|
|
|
|
228,579
|
|
|
|
6,629,104
|
|
Operating Officer
|
|
|
2007
|
|
|
|
700,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,404,300
|
|
|
|
—
|
|
|
|
208,677
|
|
|
|
3,312,977
|
|
Ira S. Lederman
|
|
|
2009
|
|
|
|
555,000
|
|
|
|
325,000
|
|
|
|
—
|
|
|
|
235,104
|
|
|
|
—
|
|
|
|
62,490
|
(7)
|
|
|
1,177,594
|
|
Senior Vice President —
|
|
|
2008
|
|
|
|
545,000
|
|
|
|
340,000
|
|
|
|
644,750
|
|
|
|
230,435
|
|
|
|
—
|
|
|
|
54,907
|
|
|
|
1,815,092
|
|
General Counsel and Secretary
|
|
|
2007
|
|
|
|
525,000
|
|
|
|
400,000
|
|
|
|
—
|
|
|
|
451,720
|
|
|
|
40,676
|
|
|
|
59,490
|
|
|
|
1,476,886
|
|
Eugene G. Ballard
|
|
|
2009
|
|
|
|
555,000
|
|
|
|
325,000
|
|
|
|
—
|
|
|
|
235,104
|
|
|
|
—
|
|
|
|
62,490
|
(7)
|
|
|
1,177,594
|
|
Senior Vice President —
|
|
|
2008
|
|
|
|
545,000
|
|
|
|
340,000
|
|
|
|
644,750
|
|
|
|
230,435
|
|
|
|
—
|
|
|
|
54,907
|
|
|
|
1,815,092
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
|
525,000
|
|
|
|
400,000
|
|
|
|
—
|
|
|
|
451,720
|
|
|
|
23,166
|
|
|
|
59,490
|
|
|
|
1,459,376
|
|
James G. Shiel
|
|
|
2009
|
|
|
|
555,000
|
|
|
|
325,000
|
|
|
|
—
|
|
|
|
220,284
|
|
|
|
—
|
|
|
|
59,925
|
(7)
|
|
|
1,160,209
|
|
Senior Vice President —
|
|
|
2008
|
|
|
|
545,000
|
|
|
|
200,000
|
|
|
|
644,750
|
|
|
|
215,615
|
|
|
|
—
|
|
|
|
53,878
|
|
|
|
1,659,243
|
|
Investments
|
|
|
2007
|
|
|
|
525,000
|
|
|
|
400,000
|
|
|
|
—
|
|
|
|
389,005
|
|
|
|
22,456
|
|
|
|
59,490
|
|
|
|
1,395,951
|
|
|
|
|
(1)
|
|
Each of Messrs. Lederman,
Ballard, and Shiel contributed a portion of his salary to the
Company’s 401(k) profit sharing plan. All such deferred
amounts are included in the Salary column.
|
|
(2)
|
|
This column represents the
aggregate grant date fair value of awards computed in accordance
with FASB ASC Topic 718, Compensation — Stock
Compensation (“ASC 718”). Pursuant to SEC rules,
the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. For RSUs, fair
value is calculated using the closing price of the
Company’s common stock on the date of grant. The RSUs vest
in one installment, generally on the fifth anniversary of the
grant date, provided the recipient remains employed with the
Company and/or its subsidiaries on such vesting date. If a
recipient has a separation from service prior to such vesting
date on account of death, disability or as determined by the
Compensation Committee, a pro rata share of the number of RSUs
granted to the recipient shall vest and be distributed to the
recipient 90 days (or, in some cases, 6 months)
following such event. Upon a separation from service for any
other reason prior to vesting, all unvested RSUs held by the
recipient will expire and be forfeited. For additional
information relating to the valuation assumptions with respect
to the prior year grants, refer to note 22 of the
Company’s financial statements in the Form
10-K for the
year ended December 31, 2009, as filed with the SEC. These
amounts reflect the Company’s accounting expense for these
awards and do not necessarily correspond to the actual value
that will be recognized by the NEOs.
|
|
(3)
|
|
This column includes the dollar
amount of bonus awards earned by Messrs. Berkley and
Berkley, Jr., for performance during 2009 under the 2007 Annual
Incentive Compensation Plan of $6,200,000 and $1,100,000,
respectively. These awards were paid in February 2010. This
column also includes the dollar amounts contingently earned
during the 2009 fiscal year with respect to awards granted to
each of the named executives in fiscal years prior to 2010
pursuant to the LTIP, subject to the terms and conditions of the
LTIP agreements. See the 2009 Grants of Plan-Based Awards table
on page 36 for additional information relating to the 2007
Annual Incentive Compensation Plan. For additional information
on the LTIP, refer to note 23 of the Company’s
financial statements in the Form
10-K for the
year ended December 31, 2009, as filed with the SEC.
|
|
|
|
During 2008, amendments were made
to the outstanding LTIP awards originally granted in 2006 in
order to comply with Internal Revenue Code Section 409A.
Originally, the award could be paid out as soon as the maximum
award value was achieved, or after five years, whichever
occurred earlier. In order to comply with Section 409A,
however, a specific payout date needed to be set. More than half
of the maximum award for the 2006 LTIP had already been earned
as of the end of 2008, and it appeared likely to achieve early
payment. Therefore, the
|
35
|
|
|
|
|
Compensation Committee decided to
pay 50% of the maximum value on January 2, 2009. The
balance of the award would be paid after the end of the
five-year performance period. With respect to the NEOs other
than the CFO, an IRS discount factor was applied to the
January 2, 2009 accelerated payment in order to maintain
compliance with Section 162(m) (which ensures the payment
is tax deductible to the Company). The accruals for these
payments have already been reflected in this column in prior
years. Actual payments made to the NEOs on January 2, 2009
were as follows:
|
|
|
|
|
|
|
|
Accelerated Partial Payment
|
|
|
of 2006 LTIP Award
|
|
William R. Berkley
|
|
$
|
4,919,812
|
|
W. Robert Berkley, Jr.
|
|
|
1,229,953
|
|
Eugene G. Ballard
|
|
|
500,000
|
|
Ira S. Lederman
|
|
|
491,981
|
|
James G. Shiel
|
|
|
430,484
|
|
|
|
|
(4)
|
|
The bonus awards earned by
Messrs. Berkley and Berkley, Jr., for performance during
2009 and paid in February 2010 under the 2007 Annual Incentive
Compensation Plan are reported in the Non-Equity Incentive Plan
Compensation column of this Summary Compensation Table.
|
|
(5)
|
|
This amount represents the change
in pension value under the Supplemental Benefits Agreement. See
pages 28-29 for additional information about the
Supplemental Benefits Agreement, amended as of December 12,
2008.
|
|
(6)
|
|
This amount includes
(i) Company director fees of $78,000 and 2,000 shares
of the Company’s common stock awarded to directors on
May 19, 2009, having a value of $46,180, payable to each of
Messrs. Berkley and Berkley, Jr.; (ii) the incremental
cost to the Company related to personal use of Company-owned or
chartered aircraft by Mr. Berkley ($78,895) and
Mr. Berkley, Jr. ($51,287); and (iii) for
Mr. Berkley only, secretarial and administrative assistant
expenses of $61,420. To increase productivity and for reasons of
security and personal safety, the Board has required
Messrs. Berkley and Berkley, Jr., to use Company-owned or
non-commercial aircraft for all air travel. The methodology used
to calculate the cost to the Company is based on the aggregate
incremental variable trip-related costs, including the cost of
fuel, on-board catering, landing and parking fees, flight crew
travel expenses, and ground transportation costs. Since the
corporate aircraft are used primarily for business travel, the
methodology excludes fixed costs which do not change based on
usage, such as pilots’ and other employees’ salaries,
purchase costs of the aircraft, aircraft maintenance, and hangar
expenses.
|
|
(7)
|
|
For Messrs. Berkley, Berkley,
Jr., Lederman, Ballard, and Shiel, these amounts include Company
contributions to the Profit Sharing Plan of $22,050 each;
attributed premiums for term life insurance of $1,740 each;
Benefit Replacement Plan contributions of $67,950, $40,950,
$27,900, $27,900, and $27,900, respectively; and dividend
equivalents on vested RSUs of $133,650, $10,800, $10,800,
$10,800 and $8,235, respectively.
|
Plan-Based
Awards
The following table shows information regarding awards granted
to the NEOs in 2009 (portions of which are reflected to the
extent required in the Summary Compensation Table):
2009
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
Possible
|
|
|
|
|
and
|
|
|
|
|
Future
|
|
|
|
|
Payouts
|
|
|
|
|
Under
|
|
|
|
|
Non-Equity
|
|
|
|
|
Incentive
|
|
|
|
|
Plan
|
|
|
|
|
Awards
|
Name
|
|
Plan Name
|
|
Maximum($)
|
|
William R. Berkley
|
|
2007 Annual Incentive Compensation Plan
|
|
|
15,289,200
|
(1)
|
W. Robert Berkley, Jr.
|
|
2007 Annual Incentive Compensation Plan
|
|
|
3,822,300
|
(1)
|
|
|
|
(1)
|
|
These amounts represented the
potential maximum value of the annual bonus awards for 2009
under the 2007 Annual Incentive Compensation Plan, which was,
for the CEO, 4% of the Company’s pre-tax net income and,
for the COO, 1% of the Company’s pre-tax net income. The
actual amount of bonus awards paid to Messrs. Berkley and
Berkley, Jr. for performance during 2009 under the 2007 Annual
Incentive Compensation Plan of $6,200,000 and $1,100,000,
respectively, are reported in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table. Because
of the nature of these bonus awards, there is no target or
minimum threshold performance level for an award. As such, the
“Threshold” and “Target” columns have been
omitted from this table.
|
36
Outstanding
Equity Awards
The following table provides information on the holdings of
stock options and stock awards by the NEOs as of
December 31, 2009. This table includes unexercised option
awards (no NEO has any unvested option awards) and unvested
RSUs. Each equity grant is shown separately for each NEO. The
market value of the stock awards is based on the closing market
price of the Company’s stock as of December 31, 2009,
which was $24.64.
OUTSTANDING
EQUITY AWARDS AT FISCAL 2009 YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION AWARDS
|
|
STOCK AWARDS
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
Shares or
|
|
of Shares
|
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
Units of
|
|
or Units
|
|
|
|
|
Unexercised
|
|
|
|
|
|
Stock
|
|
Stock That
|
|
of Stock
|
|
|
Option
|
|
Options (#)
|
|
Option
|
|
Option
|
|
Award
|
|
Have Not
|
|
That Have
|
|
|
Grant
|
|
Exercisable
|
|
Exercise
|
|
Expiration
|
|
Grant
|
|
Vested
|
|
Not Vested
|
Name
|
|
Date
|
|
(1)(2)
|
|
Price ($)(1)
|
|
Date
|
|
Date
|
|
(#)(1)(3)
|
|
($)
|
|
William R. Berkley
|
|
|
03/13/2001
|
|
|
|
2,025,000
|
|
|
|
9.34
|
|
|
|
03/13/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/03/2002
|
|
|
|
379,688
|
|
|
|
11.39
|
|
|
|
04/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/05/2005
|
|
|
|
315,000
|
|
|
|
7,761,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/17/2008
|
|
|
|
300,000
|
|
|
|
7,392,000
|
|
W. Robert Berkley, Jr.
|
|
|
03/13/2001
|
|
|
|
506,252
|
|
|
|
9.34
|
|
|
|
03/13/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/03/2002
|
|
|
|
202,502
|
|
|
|
11.39
|
|
|
|
04/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/05/2005
|
|
|
|
90,000
|
|
|
|
2,217,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/17/2008
|
|
|
|
150,000
|
|
|
|
3,696,000
|
|
Ira S. Lederman
|
|
|
03/16/2000
|
|
|
|
15,822
|
|
|
|
3.06
|
|
|
|
03/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/03/2002
|
|
|
|
56,954
|
|
|
|
11.39
|
|
|
|
04/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/05/2005
|
|
|
|
22,500
|
|
|
|
554,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/17/2008
|
|
|
|
25,000
|
|
|
|
616,000
|
|
Eugene G. Ballard
|
|
|
03/16/2000
|
|
|
|
18,985
|
|
|
|
3.06
|
|
|
|
03/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
04/03/2002
|
|
|
|
75,940
|
|
|
|
11.39
|
|
|
|
04/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/05/2005
|
|
|
|
22,500
|
|
|
|
554,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/17/2008
|
|
|
|
25,000
|
|
|
|
616,000
|
|
James G. Shiel
|
|
|
04/03/2002
|
|
|
|
63,282
|
|
|
|
11.39
|
|
|
|
04/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/05/2005
|
|
|
|
22,500
|
|
|
|
554,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/17/2008
|
|
|
|
25,000
|
|
|
|
616,000
|
|
|
|
|
(1)
|
|
These amounts have been adjusted to
reflect all subsequent common stock splits through
December 31, 2009.
|
|
(2)
|
|
All outstanding options are subject
to forfeiture in the event the NEO’s employment is
terminated for cause, and the value of options that have already
been exercised may be subject to recapture by the Company in
certain circumstances. As such, the NEOs may never realize the
full value of these options if such forfeiture or recapture
occurs. All stock options vested according to a graded schedule
of 25% of the award on each of the third, fourth, fifth, and
sixth anniversaries of the grant date.
|
|
(3)
|
|
Represents restricted stock units
(RSUs), each of which represents the right to receive one share
of common stock, subject to vesting and continued employment
requirements. These respective RSUs will vest in full in one
installment generally on the fifth anniversary of their
respective grant dates, provided the NEO remains employed by the
Company on the vesting date. If an NEO separates from service
prior to the vesting date on account of death, disability or as
determined by the Compensation Committee, a pro rata share of
the number of RSUs granted to him shall vest and be distributed
to him generally 90 days following such termination date.
Upon a separation from service for any other reason prior to
vesting, all unvested RSUs will expire and be forfeited. In
addition, vested RSUs may be subject to recapture by the Company
in certain circumstances. As such, the NEOs may never realize
the full value of these RSUs if such forfeiture or recapture
occurs. In the event of a Change of Control of the Company (as
defined in the RSU agreements) all RSUs will vest in full and
the shares of common stock underlying each RSU will be delivered
to the NEOs. Subject generally to a minimum three-year vesting
requirement on all equity awards, the Compensation Committee may
generally accelerate the vesting of any or all RSUs at any time.
|
37
Option
Exercises
The following table shows for the fiscal year ended
December 31, 2009, information concerning the exercise of
stock options by the NEOs and the pre-tax value realized upon
such exercises.
OPTION
EXERCISES AND STOCK VESTED IN 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION AWARDS
|
|
STOCK (RSU) AWARDS
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
Number of Shares
|
|
Pre-Tax Value
|
|
(RSUs) Acquired on
|
|
Pre-Tax Value
|
|
|
Acquired on Exercise
|
|
Realized on Exercise
|
|
Vesting
|
|
Realized on Vesting
|
Name
|
|
(#)(1)
|
|
($)
|
|
(#)(2)
|
|
($)
|
|
William R. Berkley
|
|
|
265,780
|
|
|
|
5,690,350
|
|
|
|
202,500
|
|
|
|
4,851,900
|
|
W. Robert Berkley, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
22,500
|
|
|
|
539,100
|
|
Ira S. Lederman
|
|
|
—
|
|
|
|
—
|
|
|
|
22,500
|
|
|
|
539,100
|
|
Eugene G. Ballard
|
|
|
12,657
|
|
|
|
239,725
|
|
|
|
22,500
|
|
|
|
539,100
|
|
James G. Shiel
|
|
|
34,178
|
|
|
|
730,155
|
|
|
|
18,000
|
|
|
|
431,280
|
|
|
|
|
(1) |
|
Mr. Berkley exercised 265,780 stock options with an
exercise price of $3.06 per share on December 30, 2009,
when the market price of the Company’s stock was $24.47 per
share. Mr. Ballard exercised 12,657 stock options with an
exercise price of $4.73 per share on August 7, 2009, when
the market price of the Company’s stock was $23.67 per
share. Mr. Shiel exercised 34,178 stock options with an
exercise price of $3.06 per share on November 19, 2009,
when the market price of the Company’s stock was $24.42 per
share. |
|
(2) |
|
Represents RSUs granted on May 11, 2004 that vested on
May 11, 2009 (the receipt of which has been deferred until
the earlier of the NEO’s separation of service or a change
in control) when the market price of the Company’s stock
was $23.96 per share. |
Pension
Benefits
The following table shows for the fiscal year ended
December 31, 2009 information relating to the pension
benefits provided to Mr. Berkley under the Supplemental
Benefits Agreement:
PENSION
BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present
|
|
Payments
|
|
|
|
|
Years
|
|
Value of
|
|
During
|
|
|
|
|
Credited
|
|
Accumulated
|
|
Last Fiscal
|
|
|
|
|
Service
|
|
Benefit
|
|
Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)(1)
|
|
($)
|
|
William R. Berkley
|
|
Supplemental Benefits Agreement(1)
|
|
|
—
|
|
|
|
45,692,297
|
|
|
|
—
|
|
|
|
|
(1) |
|
For additional information on the key actuarial assumptions used
to derive the projected benefit obligation and related
retirement expenses with respect to the Supplemental Benefits
Agreement (as described above on pages 28-29), refer to
note 24 of the Company’s financial statements in the
Form 10-K
for the year ended December 31, 2009, as filed with the SEC. |
38
Mr. Berkley is entitled to the commencement of retirement
benefits on the earliest to occur of January 2, 2014, his
death, and a change of control of the Company. In the event
retirement benefits are triggered by a change in control of the
Company, Mr. Berkley will receive, in lieu of the yearly
retirement benefits described above on pages 28-29, a lump
sum amount equal to the actuarial present value set forth in the
Pension Benefits table. If Mr. Berkley predeceases his
spouse, fifty percent (50%) of such benefit will be paid
annually to his spouse for the remainder of her life.
Mr. Berkley may elect, within ten days of the date the
annual retirement benefit begins, to receive an annual lifetime
annuity benefit under a joint-and survivor annuity based on the
lives of Mr. Berkley and his spouse that is the actuarial
equivalent to the payments that would otherwise have been made
had no such election occurred.
Non-Qualified
Deferred Compensation
The table below provides information on the year-end balances of
amounts deferred in prior years by the NEOs under the Deferred
Compensation Plan for Officers.
NON-QUALIFIED
DEFERRED COMPENSATION FOR 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Earnings in
|
|
Aggregate
|
|
Aggregate
|
|
|
Last FY
|
|
Withdrawals/
|
|
Balance at
|
Name
|
|
($)(1)
|
|
Distributions ($)
|
|
Last FYE ($)(1)
|
|
William R. Berkley
|
|
|
62,396
|
|
|
|
—
|
|
|
|
1,932,724
|
|
W. Robert Berkley, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Ira S. Lederman
|
|
|
67,448
|
|
|
|
—
|
|
|
|
2,089,218
|
|
Eugene G. Ballard
|
|
|
50,833
|
|
|
|
—
|
|
|
|
1,574,564
|
|
James G. Shiel
|
|
|
35,812
|
|
|
|
—
|
|
|
|
1,109,295
|
|
|
|
|
(1) |
|
Such amounts are accrued, and are not secured or funded by the
Company. |
The amounts set forth in the table above were deferred pursuant
to the Company’s Deferred Compensation Plan for Officers,
which NEOs are eligible to participate in on a voluntary basis.
Under the plan, participants may elect to defer all or a portion
of their base salary, bonus compensation, and excess profit
sharing contribution for any year. Amounts deferred will accrue
a reasonable rate of interest, as determined annually by the
Compensation Committee. At the time of the deferral election,
amounts may be deferred until any date on or before the
officer’s separation from service. At the officer’s
election made at the time of deferral, the Company will pay the
deferred amounts either in a lump sum or in no more than five
annual installments beginning generally within 60 days of a
date which is prior to or on the date of the officer’s
separation from service (subject to a six-month delay to comply
with Section 409A of the IRC). For 2009, the Compensation
Committee agreed to accrue interest on the deferred amounts at
the prime rate of interest reported by JPMorgan Chase.
Potential
Payments Upon Termination or Change of Control
Except as provided for in the CEO’s Supplemental Benefits
Agreement, RSUs that ratably vest upon death or disability, and
LTIP awards that become payable upon certain terminations, the
Company does not have any contracts, agreements, plans or
arrangements that provide for severance payments to the NEOs at,
following, or in connection with any termination of employment.
None of
39
the NEOs other than the CEO has employment or change of control
agreements with the Company. The information below describes and
quantifies certain compensation that would become payable under
existing plans and arrangements if a change of control had
occurred or if an NEO’s employment had terminated on
December 31, 2009. Due to the number of factors that affect
the nature and amount of any benefits provided upon the events
discussed below, any actual amounts paid or distributed may be
different. Factors that could affect these amounts include the
timing during the year of any such event and the Company’s
stock price.
Mr. Berkley is the only named executive who was eligible to
receive immediate retirement benefits as of December 31,
2009, which benefits are described above and quantified in the
Pension Benefits table on page 38. In addition to the cash
retirement benefit described above on pages 28-29, during
the two-year period following his termination as defined in the
agreement or, if longer, the period that Mr. Berkley
performs consulting services to the Company or remains Chairman
of the Board, he will be entitled to continue to receive certain
perquisites, including continued use of the Company plane and a
car and driver, in a manner consistent with his prior use of
such perquisites. Additionally, for so long as Mr. Berkley
requests, following such termination, the Company is required to
provide him with office accommodations and support, including
secretarial support, in a manner consistent with that provided
prior to such termination. The Company estimates the cost
associated with the benefits that are to be provided during the
two-year period set forth above to be $800,000 per annum, and
that the cost associated with the benefits to be provided upon
request would be $200,000 per annum. After his termination,
Mr. Berkley and his spouse are also entitled to receive
lifetime health insurance coverage for which the Company
estimates the present value of the cost to be $200,000. The
estimated benefit to Mr. Berkley under the Supplemental
Benefits Agreement described above, had he become entitled to
receive such benefits upon a change in control occurring on
December 31, 2009, does not include any
gross-up as
provided under the agreement because Mr. Berkley would not
have been subject to the excise tax under Section 4999 of
the Internal Revenue Code.
The agreement prohibits Mr. Berkley from competing against
the Company for two years following his resignation of
employment other than for “good reason,” during which
time Mr. Berkley has agreed to be available to provide
consulting services to the Company.
As described in the Compensation Discussion and Analysis above,
with respect to all the NEOs, and in the Pension Benefits table,
with respect to Mr. Berkley, upon a Change of Control as
described in the various plan documents:
1. Mr. Berkley will be entitled to a lump sum payment
of the present value of the retirement benefit under the
Supplemental Benefits Agreement, as disclosed in the Pension
Benefits table above.
2. RSUs become fully vested and settled in full as of the
date immediately before the date of the Change of Control, or
such other date as determined by the Compensation Committee, but
no later than the date of the Change of Control.
3. The value of all LTIP awards will be determined and
fixed as of the end of the fiscal year immediately prior to the
fiscal year in which the Change of Control occurred. The value
will be paid to the participant within 90 days following
the last day of the performance period.
40
In addition, if one of the NEOs were to die or become disabled,
his RSUs would vest pro-rata. With respect to LTIP awards, if
one of the NEOs, prior to the last day of the performance period
of the award, were to terminate employment due to death,
disability, qualified retirement, or termination by the Company
for a reason other than cause, subject to the terms and
conditions of the LTIP agreements, the cash value of the LTIP
awards for that NEO would be determined and fixed as of the end
of the fiscal year immediately prior to the fiscal year in which
the termination occurred and paid 90 days following the
termination.
The following table provides the intrinsic value (that is, the
value based upon the Company’s stock price) of RSUs that
would become exercisable or vested, as well as the value of all
performance units awarded under the LTIP, upon (A) a change
in control or (B) if the named executive had died or become
disabled, in each case as of December 31, 2009.
POTENTIAL
TERMINATION OR CHANGE OF CONTROL PAYMENTS
UNDER RSUS AND THE LTIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
LTIP
|
|
Total
|
Name
|
|
($)
|
|
($)(1)(2)
|
|
($)
|
|
William R. Berkley
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control
|
|
|
15,153,600
|
|
|
|
2,849,000
|
|
|
|
18,002,600
|
|
Death or Disability
|
|
|
8,853,366
|
|
|
|
2,849,000
|
|
|
|
11,702,366
|
|
W. Robert Berkley, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control
|
|
|
5,913,600
|
|
|
|
824,125
|
|
|
|
6,737,725
|
|
Death or Disability
|
|
|
3,071,516
|
|
|
|
824,125
|
|
|
|
3,895,641
|
|
Ira S. Lederman
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control
|
|
|
1,170,400
|
|
|
|
307,275
|
|
|
|
1,477,675
|
|
Death or Disability
|
|
|
662,493
|
|
|
|
307,275
|
|
|
|
969,768
|
|
Eugene G. Ballard
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control
|
|
|
1,170,400
|
|
|
|
307,275
|
|
|
|
1,477,675
|
|
Death or Disability
|
|
|
662,493
|
|
|
|
307,275
|
|
|
|
969,768
|
|
James G. Shiel
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control
|
|
|
1,170,400
|
|
|
|
282,850
|
|
|
|
1,453,250
|
|
Death or Disability
|
|
|
662,493
|
|
|
|
282,850
|
|
|
|
945,343
|
|
|
|
|
(1) |
|
Had termination or change of control occurred on or after
January 1, 2010, the LTIP value including the amount earned
during 2009 would have been as follows for the identified
individuals: Berkley - $4,966,950; Berkley, Jr. —
$1,470,156; Lederman — $542,379; Ballard - $542,379;
and Shiel — $503,134. |
|
(2) |
|
In addition, LTIP awards are valued and paid in the event of
qualified retirement or termination by the Company for other
than cause. |
Certain of the NEOs participate in the Deferred Compensation
Plan for Officers that permits the deferral of their base
salary, bonus compensation, and excess profit sharing
contribution for any year. The last column of the Non-Qualified
Deferred Compensation table for 2009 on page 39 reports
each NEO’s aggregate balance at December 31, 2009. The
NEOs are entitled to receive the amount in their deferred
compensation account in the event of a separation from service.
The account balances continue to accrue interest income between
the separation from service event and the date
41
distributions are made, and therefore amounts payable to the
NEOs, assuming a separation from service on December 31,
2009, would differ from those shown in the Non-Qualified
Deferred Compensation table for 2009 to some small degree to
account for such interest.
Director
Compensation
For 2009, each director received a quarterly stipend of $18,000
and a fee of $1,500 for each Board meeting attended. In
addition, on May 19, 2009, pursuant to the Company’s
2009 Directors Stock Plan, each continuing director
received a grant of 2,000 shares of the Company’s
common stock. Members of the Audit Committee and the
Compensation Committee, which both consist solely of directors
who are independent under the rules of the NYSE, each receive an
annual stipend of $5,000, with the Chairman of each such
committee receiving an additional annual stipend of $30,000.
Members of the Audit Committee and the Compensation Committee
each also receive $1,000 for each substantive meeting attended.
In accordance with the Company’s guidelines, each director,
within 12 months of becoming a director, is required to own
an amount of common stock of the Company equal to three times
the annual stipend paid to the director. The Company also
maintains a Deferred Compensation Plan for Directors pursuant to
which directors may elect to defer all or a portion of their
retainer
and/or
meeting fees for any year. Amounts deferred may, at the election
of the director, (1) be deemed invested in the
Company’s common stock or (2) accrue a reasonable rate
of interest, determined annually by the Compensation Committee.
At the time of the deferral election, amounts may be deferred
until any date on or before the director’s separation from
service with the Board. The Company will pay the deferred
amounts, at the election of the director made at the time of
deferral, either in a lump sum or in no more than five annual
installments beginning on a date which is prior to or on the
date of the director’s separation from service with the
Board. Upon the death of a director, the director’s
deferred account balance will be distributed within sixty days
following death. For 2009, the Compensation Committee determined
that interest on the deferred amounts would accrue at the prime
rate of interest reported by JPMorgan Chase.
The following table shows for the fiscal year ended
December 31, 2009, information concerning the compensation
of directors who are not named in the Summary Compensation Table:
2009
DIRECTOR COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
Fees Earned or
|
|
Awards
|
|
|
Name
|
|
Paid in Cash ($)
|
|
($)(1)
|
|
Total ($)
|
|
Philip J. Ablove(2)
|
|
|
40,000
|
|
|
|
—
|
|
|
|
40,000
|
|
Ronald E. Blaylock
|
|
|
86,000
|
|
|
|
46,180
|
|
|
|
132,180
|
|
Mark E. Brockbank
|
|
|
85,000
|
|
|
|
46,180
|
|
|
|
131,180
|
|
George G. Daly
|
|
|
87,000
|
|
|
|
46,180
|
|
|
|
133,180
|
|
Mary C. Farrell
|
|
|
85,000
|
|
|
|
46,180
|
|
|
|
131,180
|
|
Rodney A. Hawes, Jr.
|
|
|
115,000
|
|
|
|
46,180
|
|
|
|
161,180
|
|
Jack H. Nusbaum
|
|
|
78,000
|
|
|
|
46,180
|
|
|
|
124,180
|
|
Mark L. Shapiro
|
|
|
117,000
|
|
|
|
46,180
|
|
|
|
163,180
|
|
|
|
|
(1) |
|
Represents the fair value of 2,000 shares of the
Company’s common stock on May 19, 2009, the date of
grant ($23.09 per share). |
|
(2) |
|
Retired as a director on May 19, 2009. |
42
EQUITY
COMPENSATION PLAN INFORMATION
The following table gives information about our common stock
that may be issued upon the exercise of options, warrants and
rights under our existing equity compensation plans and
arrangements as of December 31, 2009, including the W. R.
Berkley Corporation 2003 Stock Incentive Plan. The table also
includes information regarding 1,012,500 RSUs awarded to
officers of the Company and its subsidiaries on April 4,
2003 (as adjusted for subsequent stock splits) under a plan not
approved by stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
(a)
|
|
|
|
Number of Securities
|
|
|
Number of Securities
|
|
(b)
|
|
Remaining Available
|
|
|
to be Issued
|
|
Weighted-Average
|
|
for Future Issuance
|
|
|
Upon Exercise of
|
|
Exercise Price of
|
|
Under Equity Compensation
|
|
|
Outstanding Options,
|
|
Outstanding Options,
|
|
Plans (Excluding Securities
|
Plan Category
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
Reflected in Column (a))
|
|
Equity compensation plans approved by stockholders
|
|
|
10,139,397
|
|
|
$
|
20.87
|
|
|
|
3,929,067
|
|
Equity compensation plans not approved by stockholders
|
|
|
978,760
|
(1)
|
|
$
|
12.62
|
|
|
|
—
|
|
Total
|
|
|
11,118,157
|
|
|
$
|
20.14
|
|
|
|
3,929,067
|
|
|
|
|
(1) |
|
Represents RSUs, each of which represents the right to receive
one share of common stock following the recipient’s
termination of employment with the Company and its subsidiaries.
Delivery of shares of common stock to the RSU recipients in
satisfaction of the settlement of RSUs will be satisfied
exclusively from treasury shares held by the Company. These RSUs
held by any recipient vested in full in one installment on
April 4, 2008. In the event of a change of control of the
Company (as defined in the RSU agreements) the shares of common
stock underlying each RSU will be delivered to the RSU
recipients. The following list sets forth the names of the
executive officers of the Company who received such RSUs on
April 4, 2003 and the number of RSUs each individual
received (as adjusted for subsequent stock splits): William R.
Berkley — 455,625; W. Robert Berkley, Jr. —
33,750; Eugene G. Ballard — 33,750; Robert P.
Cole — 25,313; Paul J. Hancock — 16,875;
Robert C. Hewitt — 16,875; Ira S. Lederman —
33,750; Clement P. Patafio — 8,438; and James G.
Shiel — 25,313; and an aggregate of 337,500 RSUs were
granted to 24 other officers of the Company and its subsidiaries. |
APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP has been appointed by the Board of Directors as the
independent registered public accounting firm to audit the
financial statements of the Company for the fiscal year ending
December 31, 2010. The appointment of this firm was
recommended to the Board by the Audit Committee. The Board is
submitting this matter to a vote of stockholders in order to
ascertain their views. If the appointment of KPMG LLP is not
ratified, the Board will reconsider its action and will appoint
auditors for the 2010 fiscal year without further stockholder
action. Further, even if the appointment is ratified by
stockholder action, the Board may at any time in the future in
its discretion reconsider the appointment without submitting the
matter to a vote of stockholders.
43
It is expected that representatives of KPMG LLP will attend the
Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to
appropriate stockholder questions.
The Board of Directors unanimously recommends a vote
“FOR” the ratification of the appointment of
KPMG LLP.
Audit and
Non-Audit Fees
The aggregate amount of the fees billed or expected to be billed
by KPMG LLP for its professional services provided in 2009 and
2008 were as follows:
|
|
|
|
|
|
|
|
|
Type of Fees
|
|
2009 ($)
|
|
|
2008 ($)
|
|
|
Audit Fees(1)
|
|
|
6,860,200
|
|
|
|
6,173,100
|
|
Audit-Related Fees(2)
|
|
|
448,200
|
|
|
|
152,850
|
|
Tax Fees(3)
|
|
|
147,900
|
|
|
|
107,700
|
|
All Other Fees(4)
|
|
|
37,600
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
|
7,493,900
|
|
|
|
6,433,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consist of fees the Company paid to KPMG LLP for
professional services for the audit of the Company’s
consolidated financial statements included in its
Form 10-K
and review of financial statements included in its
Forms 10-Q,
or for services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements
and public offerings of securities. |
|
(2) |
|
Fees associated with a SAS 70 review, actuarial services and the
audit of health and benefit plans. |
|
(3) |
|
Tax fees consist of fees for tax consultations and tax
compliance services. |
|
(4) |
|
All other fees consist of fees for actuarial services. |
Pre-Approval
Policies
Consistent with SEC policies regarding auditor independence, the
Audit Committee has adopted a policy regarding the pre-approval
of services of the Company’s independent auditors. Pursuant
to this policy, such services may be generally pre-approved on
an annual basis; other services, or services exceeding the
pre-approved cost levels, must be specifically pre-approved by
the Audit Committee. The Audit Committee may also delegate
pre-approval authority to one or more of its members. All of
such fees for 2009 were approved by the Audit Committee in
accordance with this policy.
44
AUDIT
COMMITTEE REPORT
To the Board of Directors of W. R. Berkley Corporation:
The Audit Committee reviews the Company’s financial
reporting process on behalf of the Board. Management has the
primary responsibility for establishing and maintaining adequate
internal financial controls, for preparing the financial
statements and for the public reporting process. KPMG LLP, the
Company’s independent registered public accounting firm for
2009, is responsible for expressing opinions on the conformity
of the Company’s audited financial statements with
accounting principles generally accepted in the United States of
America and on the effectiveness of the Company’s internal
control over financial reporting.
In this context, the Audit Committee has reviewed and discussed
with management and KPMG LLP the audited financial statements
for the year ended December 31, 2009 and KPMG LLP’s
evaluation of the Company’s internal control over financial
reporting. The Audit Committee has discussed with KPMG LLP the
matters that are required to be discussed by Statement on
Auditing Standards No. 61, as currently in effect
(Communication With Audit Committees). KPMG LLP has provided to
the Audit Committee the written disclosures and the letter
required by the applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountant’s communications with the audit committee
concerning independence and the Audit Committee has discussed
with KPMG LLP that firm’s independence. The Audit Committee
has concluded that KPMG LLP’s provision of audit and
non-audit services to the Company and its affiliates are
compatible with KPMG LLP’s independence.
Based on the considerations and discussions referred to above,
the Audit Committee recommended to our Board of Directors that
the audited financial statements for the year ended
December 31, 2009 be included in our Annual Report on
Form 10-K
for 2009. The Audit Committee has selected, and the Board of
Directors has ratified the selection of KPMG LLP as the
Company’s independent registered public accounting firm for
the fiscal year ending December 31, 2010.
Audit Committee
Mark L. Shapiro, Chairman
Ronald E. Blaylock
George G. Daly
April 6, 2010
The above report of the Audit Committee shall not be deemed
incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
45
OTHER
MATTERS TO COME BEFORE THE MEETING
Management is not aware of any matters to come before the Annual
Meeting other than as set forth above. However, since matters of
which management is not now aware may come before the Annual
Meeting or any adjournment thereof, the proxies intend to vote,
act and consent in accordance with their best judgment with
respect thereto. Upon receipt of such proxies properly submitted
in time for voting, the shares represented thereby will be voted
as indicated therein and in this proxy statement.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the copies of Forms 3, 4 and
5 received by it, or written representations from certain
reporting persons that no Forms 5 were required for such
persons, the Company believes that all filing requirements under
Section 16(a) of the Exchange Act applicable to its
officers, directors and ten-percent stockholders were complied
with during the fiscal year ended December 31, 2009, except
that the most recent Form 4 for W. Robert Berkley, Jr.
included 25,312 shares of common stock (5,000 shares
initially issued, as adjusted for subsequent stock splits) that
were not included in his initial Form 3 and subsequent
reports of beneficial ownership.
46
STOCKHOLDER
NOMINATIONS FOR BOARD MEMBERSHIP
AND OTHER PROPOSALS FOR 2011 ANNUAL MEETING
It is anticipated that the next Annual Meeting of Stockholders
after the one scheduled for May 18, 2010 will be held on or
about May 17, 2011. The Company’s By-Laws require
that, for nominations of directors or other business to be
properly brought before an Annual Meeting of Stockholders,
written notice of such nomination or proposal for other business
must be furnished to the Company. Such notice must contain
certain information concerning the nominating or proposing
stockholder and information concerning the nominee and must be
furnished by the stockholder (who must be entitled to vote at
the meeting) to the Secretary of the Company, in the case of the
Annual Meeting of Stockholders to be held in 2011 no earlier
than February 17, 2011 and no later than March 21,
2011. A copy of the applicable provisions of the By-Laws may be
obtained by any stockholder, without charge, upon written
request to the Secretary of the Company at the address set forth
below.
Since the Company did not receive notice of any stockholder
proposal for the 2010 Annual Meeting, it will have discretionary
authority to vote on any stockholder proposals presented at such
meeting.
In addition to the foregoing, and in accordance with the rules
of the Securities and Exchange Commission, in order for a
stockholder proposal, relating to a proper subject, to be
considered for inclusion in the Company’s proxy statement
and form of proxy relating to the Annual Meeting of Stockholders
to be held in 2011, such proposal must be received by the
Secretary of the Company by December 9, 2010 in the form
required under and subject to the other requirements of the
applicable rules of the Securities and Exchange Commission. Any
such proposal should be submitted by certified mail, return
receipt requested, or other means, including electronic means,
that allow the stockholder to prove the date of delivery.
The Company’s (i) Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009;
(ii) Corporate Governance Guidelines; (iii) Statement
of Business Ethics; (iv) Statement of Business Ethics for
the Board of Directors; (v) Code of Ethics for Senior
Financial Officers; (vi) Audit Committee Charter;
(vii) Compensation Committee Charter; and
(viii) Nominating and Corporate Governance Committee
Charter are available on our website at www.wrberkley.com
and are also available without charge to any stockholder of the
Company who requests a copy in writing. Requests for copies of
any or all of these documents should be directed to the
Secretary, W. R. Berkley Corporation, 475 Steamboat Road,
Greenwich, Connecticut 06830.
By Order of the Board of Directors,
William R. Berkley
Chairman of the Board and
Chief Executive Officer
47
W. R. BERKLEY CORPORATION ATTN: IRA S. LEDERMAN GENERAL COUNSEL AND SECRETARY 475
STEAMBOAT ROAD GREENWICH,CT 06830 VOTE BY INTERNET — www.proxyvote.com Use the Internet
to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M.
Eastern Time on May 17, 2010. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting instruction form.
Electronic Delivery of Future PROXY MATERIALS If you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials electronically in future years. VOTE
BY PHONE — 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern Time on May 17, 2010. Have your proxy card in hand when you call and then
follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP
THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED. For Withhold For All To withhold authority to vote for any All
All Except individual nominee(s), mark “For All Except” and write the number(s) of the The
Board of Directors recommends that you nominee(s) on the line below. vote FOR the
following: 1. Election of Directors Nominees 01 W. Robert Berkley, Jr.
02 Ronald E. Blaylock 03 Mark E. Brockbank 04 Mary C. Farrell The Board of Directors recommends you
vote FOR the following proposal(s): For Against Abstain 2 To ratify the appointment of
KPMG LLP as the independent registered public accounting firm for W. R. Berkley Corporation for
the fiscal year ending December 31, 2010 NOTE: In their discretion, the proxies are
authorized to vote upon such other matters as may properly come before the meeting. For
address change/comments, mark here. (see reverse for instructions) Please sign exactly as
your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign personally. All holders
must sign. If a corporation or partnership, please sign in full corporate or partnership name, by
authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
0000061466_1 R2.09.05.010 |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The
Annual Report, Notice and Proxy Statement is/ are available at www.proxyvote.com . W. R.
BERKLEY CORPORATION Annual Meeting of Stockholders May 18, 2010 1:00 PM This proxy is solicited by
the Board of Directors The undersigned stockholder of W. R. BERKLEY CORPORATION hereby
appoints EUGENE G. BALLARD and IRA S. LEDERMAN, and either of them, the true and lawful agents and
proxies of the undersigned, with full power of substitution to each of them, to vote all shares of
common stock which the undersigned may be entitled to vote at the Annual Meeting of Stockholders to
be held at the executive offices of the Company, 475 Steamboat Road, Greenwich, Connecticut, on May
18, 2010 at 1:00 p.m., and at any adjournment of such meeting. This proxy, when properly executed,
will be voted in the manner directed herein. If no such direction is made, this proxy will be voted
in accordance with the Board of Directors’ recommendations. Address change/comments: (If
you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse
side.) Continued and to be signed on reverse side 0000061466_2 R2.09.05.010 |