SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ]Confidential,for Use of the Commission Only (as permitted by Rule 14-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or 240.14a-12
Chartwell Re Corporation
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(Name of Registrant as Specified in its Charter)
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined.)
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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4. Date Filed:
Chartwell Re Corporation
Four Stamford Plaza
P. O. Box 120043
Stamford, Connecticut 06912-0043
Tel: (203) 705-2500
Fax: (203) 705-2710
March 31, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Chartwell Re Corporation (the "Corporation") on Thursday, May 20, 1999 at
9:00 a.m. The Annual Meeting will be held at the offices of the Corporation
located at Four Stamford Plaza, 107 Elm Street, 15th Floor, Stamford,
Connecticut 06902.
The official Notice of Annual Meeting, Proxy and Proxy Statement
containing information about the matters to be acted upon at the Annual Meeting
are enclosed. The matters listed in the Notice of Annual Meeting are described
in detail in the Proxy Statement.
The Board of Directors appreciates and encourages stockholder
participation in the Corporation's affairs. Whether or not you plan to attend
the Annual Meeting, please mark, sign, date and return the enclosed proxy
promptly in the prepaid envelope provided in order to make certain that your
shares will be represented at the Annual Meeting. If you attend the Annual
Meeting, you may, of course, withdraw your earlier Proxy and vote in person.
We sincerely hope that you will be able to attend the Annual Meeting.
Members of the Board of Directors, other executives of the Corporation and I
will be on hand to talk with you individually both before and after the Annual
Meeting.
Very truly yours,
/s/ Richard E. Cole
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Richard E. Cole
Chairman and Chief Executive Officer
CHARTWELL RE CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held May 20, 1999
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To the Stockholders of Chartwell Re Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of
Chartwell Re Corporation, a Delaware corporation, will be held on Thursday, May
20, 1999, at 9:00 a.m. at the offices of the corporation located at Four
Stamford Plaza, 107 Elm Street, 15th Floor, Stamford, Connecticut 06902, for the
following purposes:
1. To elect three persons to serve as Class I Directors until the Annual
Meeting of Stockholders in 2002 or until their successors have been
duly elected and qualified.
2. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
These matters are more fully discussed in the accompanying Proxy
Statement. The Board of Directors has fixed the close of business on March 26,
1999 as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournment thereof. All stockholders,
whether or not they expect to attend the Annual Meeting in person, are requested
to mark, date, sign and return the enclosed proxy in the enclosed prepaid
envelope.
By Order of the Board of Directors,
/s/ John V. Del Col
----------------------------
John V. Del Col
Vice President, General Counsel
and Secretary
Dated: March 31, 1999
PROXY STATEMENT
OF
CHARTWELL RE CORPORATION
Four Stamford Plaza, 107 Elm Street
Stamford, Connecticut 06902
Solicitation of Proxies
The accompanying proxy is solicited from stockholders by the Board of
Directors of Chartwell Re Corporation (the "Corporation") for use at the annual
meeting of stockholders to be held on May 20, 1999 at 9:00 a.m. at the offices
of the Corporation located at Four Stamford Plaza, 107 Elm Street, 15th Floor,
Stamford, Connecticut 06902 (the "Annual Meeting"). When the enclosed proxy card
is properly executed and returned, the shares represented will be voted by the
proxyholders named on the card (the "Proxyholders") in accordance with the
stockholder's directions. Stockholders are urged to indicate the way they wish
to vote on each matter by marking the appropriate boxes on the card; if no
choice is specified, the shares will be voted as recommended by the Board of
Directors. This Proxy Statement, the accompanying form of proxy, the
Corporation's 1998 Annual Report to Stockholders and the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998 are first being sent to
stockholders on or about March 31, 1999.
Voting Procedures
Stockholders of record at the close of business on March 26, 1999 are
entitled to notice of the Annual Meeting and to vote the shares held by him or
her on that date at the Annual Meeting. Each share of common stock, par value
$.01 per share (the "Common Stock"), is entitled to one vote upon each of the
matters to be voted on at the Annual Meeting. As of March 26, 1999,
approximately 9,627,891 shares of Common Stock of the Corporation were
outstanding. There is no cumulative voting of Common Stock.
Returning your completed proxy will not prevent you from voting in
person at the Annual Meeting should you be present and wish to do so. Any
stockholder executing a proxy may revoke such proxy at any time before it is
actually voted on any matter by notifying the Secretary of the Corporation in
writing at Four Stamford Plaza, P.O. Box 120043, Stamford, Connecticut 06912, by
submitting a duly executed proxy bearing a later date, or by voting by ballot at
the Annual Meeting, thereby canceling any proxy previously returned as to any
matter voted on by ballot.
Quorum and Votes Required
The presence, in person or by proxy, of a majority in number of the
outstanding shares of Common Stock as of the record date constitutes a quorum
and is required in order for the Corporation to conduct business at the Annual
Meeting. Stockholders who abstain will be counted for purposes of determining
the presence of a quorum but will not be treated as present and voting for
purposes of determining the number of votes cast. If a broker or nominee
indicates on its proxy that it does not have discretionary authority to vote on
a particular matter as to certain shares and the proxy does not indicate a vote
either for or against the resolution set out in the Notice of General Meeting
(so-called "broker non-votes"), those shares will be counted for the purpose of
determining the presence of a quorum but will not be treated as shares that are
present and voting for purposes of determining the number of votes cast.
Directors of the Corporation must be elected by a plurality of the vote
of the shares present in person or represented by proxy at the Annual Meeting.
This means that (i) the director nominees (up to the number of directors to be
elected) receiving the highest number of affirmative votes will be elected, (ii)
only shares voted in favor of a particular nominee will be counted toward such
nominee's achievement of a plurality and (iii) shares present at the Annual
Meeting that are not voted for a particular nominee or shares present by proxy
where the stockholder properly withheld authority to vote for such nominee
(including broker non-votes) will not be counted toward such nominee's
achievement of a plurality.
With respect to any other matters submitted to the stockholders for a
vote at the Annual Meeting, the affirmative vote of the holders of at least a
majority of the shares present in person or represented by proxy at the Annual
Meeting for a particular proposal is required for such proposal to become
effective.
1
ELECTION OF DIRECTORS
Your Board of Directors Recommends a Vote "For"
the Nominees for Election as Directors
The Corporation's Certificate of Incorporation and Bylaws provide for
the election of directors by the stockholders. As permitted by Delaware law, the
Board of Directors is divided into three classes (Classes I, II and III) as
nearly equal in number as possible. The terms of office of the members of one
class expire and a successor class is elected at each annual meeting of
stockholders. Vacancies in directorships (including vacancies resulting from
resignations and newly created directorships) may be filled, until the
expiration of the term of the vacated directorship and until a successor is
elected and qualified, by the vote of a majority of the directors then in
office.
At this Annual Meeting, the terms of office of the Class I directors
will terminate; therefore, the Board of Directors has nominated Messrs. Cole,
Callard and Miller (all of whom are also presently serving on the Board) for
re-election as Class I directors, to serve three-year terms until the Annual
Meeting of Stockholders is held in 2002 or until their successors have been duly
elected and qualified. It is intended that proxies will be voted in favor of
these persons. If, for any reason, any of the nominees is not able or willing to
serve as a director when the election occurs (a situation which is not presently
contemplated), it is intended that the proxies will be voted for the election of
a substitute nominee in accordance with the judgment of the Proxyholder.
Class I: Directors Standing for Re-Election
David J. Callard, 60, has been a director of the Corporation since 1992
and has been President of Wand Partners (S.C. Inc.) Inc. since December 1990.
From November 1989 until he joined Wand Partners (S.C. Inc.) Inc. in September
1990, Mr. Callard was a financial advisor to several corporations. For 17 years
prior thereto, he held several senior positions with Alex. Brown & Sons, an
investment bank, including, from 1984, the positions of director and managing
director. Mr. Callard is also a director of Panorama Trust and Information
Management Associates, Inc.
Richard E. Cole, 59, became Chairman of the Board of Directors of the
Corporation in March 1993 and has served as Chief Executive Officer and a
director of the Corporation since July 1990. From July 1990 to March 1993, Mr.
Cole also served as President of the Corporation. From October 1988 to July
1990, Mr. Cole was engaged as a principal in various entrepreneurial activities
outside of the insurance and reinsurance industries. Prior to October 1988, Mr.
Cole was President of Cole, Booth, Potter (formerly Sten-Re Cole & Associates,
Inc.), a reinsurance brokerage firm focusing on specialty lines reinsurance and
reinsurance for regional companies.
William R. Miller, 68, has been a director of the Corporation since
December 13, 1995. From 1994 until December 13, 1995, Mr. Miller had been a
director of Piedmont Management Company Inc. ("Piedmont"). He was President and
Chief Executive Officer of Winterthur U.S. Holdings from 1981 until 1990. Mr.
Miller is also a director of Lexington Global Asset Managers, Inc.
("Lexington"). He is currently retired.
Class II: Term Expires in 2000
Steven J. Bensinger, 44, has served as President of the Corporation
since March 1993 and as director of the Corporation since February 1994. Since
July 1998, Mr. Bensinger has also served as Chairman and Chief Executive of
Chartwell UK plc and Chartwell Managing Agents Limited. From February 1991 to
November 1992, Mr. Bensinger was President and Chief Operating Officer of
Skandia America Reinsurance Corporation ("Skandia America"). From prior to 1988
to February 1991, Mr. Bensinger was Skandia America's Chief Financial Officer.
Prior to joining Skandia America, he was a partner with the international
accounting and consulting firm of PricewaterhouseCoopers LLP.
Frank E. Grzelecki, 61, has been a director of the Corporation since
March 1994. Mr. Grzelecki retired as Vice Chairman of Handy & Harman in 1998.
From 1992 to 1997, Mr. Grzelecki served as President and Chief Operating Officer
of Handy & Harman. Mr. Grzelecki is also a director of Spinnaker Industries
Inc., The Morgan Group Inc., and Barnes Group Inc.
2
Lunsford Richardson, Jr., 74, has been a director of the Corporation
since December 13, 1995. From 1968 until December 13,1995, Mr. Richardson had
been a director of Piedmont and the Chairman of The Reinsurance Corporation of
New York ("RECO"). Mr. Richardson is also the Chairman of Richardson Corporation
of Greensboro and Vice Chairman of Lexington. Mr. Richardson is the cousin of
Stuart Smith Richardson, a Class III director.
John Sagan, 78, has been a director of the Corporation since 1992 and
has been President of Sagan Associates, a financial advisory service firm, since
1986. Prior to that time he was Vice President and Treasurer of Ford Motor
Company. Mr. Sagan is also a director of SBCM Derivative Products Ltd.
Class III: Expires in 2001
Jacques Q. Bonneau, 44, has been a director of the Corporation since
February 1994 and has served as Senior Executive Vice President and Chief
Underwriting Officer since February 1997. From March 1993 until February 1997,
Mr. Bonneau served as Executive Vice President and Chief Underwriting Officer of
the Corporation. From October 1990, when he joined the Corporation and
established Specialty Accounts, to March 1993, Mr. Bonneau was a Senior Vice
President of the Corporation. Mr. Bonneau managed the Special Treaty and Program
Department of Trenwick Group, Inc. ("Trenwick") from June 1988 to October 1990,
and served as a director of Trenwick America Reinsurance Company. Prior to June
1988, he was a Vice President and manager of the Special Treaty and Program
Department of Trenwick.
Robert M. DeMichele, 54, has been a director of the Corporation as well
as a director, Chief Executive Officer and President of Lexington since December
13, 1995. From 1982 until December 13, 1995, Mr. DeMichele served as President,
Chief Executive Officer and a director of Piedmont. He also served as President
and Chief Operating Officer of RECO from 1985 until December 13, 1995. Mr.
DeMichele also serves as a director of The Navigators Group, Inc., Vanguard
Cellular Systems, Inc. ("Vanguard") and Lexington.
Greg S. Feldman, 42, has been a director of the Corporation since 1992
and is a Managing Partner of Wellspring Capital Management LLC, a New York
investment firm. From 1990 to 1994, Mr. Feldman was with EXOR America Inc.,
where he was a Vice President. From 1988 to 1990, Mr. Feldman was a Vice
President of Clegg Industries, Inc., an investment firm.
Stephen L. Green, 48, has been a director of the Corporation since
1992 and has been a General Partner of Canaan Partners since 1991. From 1973 to
1991, Mr. Green held a variety of financial positions with General Electric
Company. He is also a director of Alarmguard Holdings, Inc., Advance Paradigm,
Inc. and Suiza Foods Corporation.
Stuart Smith Richardson, 52, has been a director of the Corporation
since December 13, 1995. Prior to December 13, 1995, Mr. Richardson had been a
director of Piedmont since 1983 and was Vice Chairman of Piedmont since 1986. He
is also Chairman of Lexington and Chairman of Vanguard. Stuart Smith Richardson
is the cousin of Lunsford Richardson, Jr., a Class II director.
For information with respect to arrangements relating to the election of certain
directors, see "Certain Relationships and Related Transactions."
OTHER BUSINESS
The Board of Directors of the Corporation does not intend to present,
and does not have any reason to believe that others intend to present, any
matter of business at the Annual Meeting other than that set forth in the
accompanying Notice of Annual Meeting of Stockholders. However, if other matters
properly come before the Annual Meeting, it is the intention of the Proxyholders
to vote any proxies in accordance with their judgment.
3
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
Attendance
In 1998, the Board of Directors held four regularly scheduled meetings
and nine special meetings. All of the directors attended at least 75% of the
meetings of the Board of Directors and of the committees of Board of Directors
on which they served. The Corporation considers attendance at meetings to be
only one measure of a Director's contribution to the Corporation. Directors also
fulfill their responsibilities by rendering advice in informal consultations
with executive officers of the Corporation.
Committees of the Board of Directors
The Board of Directors has four committees: the Audit Committee, the
Compensation Committee, the Corporate Finance Committee and the Nominating
Committee. All of the committees are comprised of non-employee directors.
The Audit Committee recommends an accounting firm to serve as the
Corporation's independent auditors, reviews the independence of such auditors,
reviews the audit reports prepared by such auditors, reviews the Corporation's
accounting and financial reporting practices, monitors the Corporation's
adherence to its code of conduct and reports its findings and recommendations to
the Board of Directors for appropriate action. The Audit Committee, which is
comprised of Messrs. Sagan (Chairman), Miller and L. Richardson, Jr., met twice
during 1998.
The Compensation Committee supervises the Corporation's compensation
policies including the establishment of compensation and bonuses for executive
officers, monitors the compensation arrangements of other management employees
for consistency with corporate objectives and to enhance stockholder value and
approves significant changes in salaried employee benefits. The Compensation
Committee, which is comprised of Messrs. Grzelecki (Chairman), Callard and S.
Richardson, met five times during 1998.
The Corporate Finance Committee reviews and monitors the financial
affairs of the Corporation including its investment strategy, financing
activities and mergers and acquisitions strategy. The Corporate Finance
Committee is presently comprised of Messrs. DeMichele (Chairman), Callard,
Feldman and Green. The Corporate Finance Committee met seven times during 1998.
The Nominating Committee recommends board committee structure,
establishes criteria for the selection of directors, reviews the performance of
each director and proposes nominees for election to the Board of Directors. This
committee considers nominations for directors received from other directors,
stockholders and management. In order for the Nominating Committee to consider
stockholder nominations, such nominations must be submitted in writing and must
be received by the Secretary of the Corporation not less than sixty (60) nor
more than ninety (90) days prior to an Annual Meeting. The notice of nomination
must include the information concerning the nominee that must be disclosed about
nominees for election as directors in proxy solicitations prepared in accordance
with Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The notice must be accompanied by the written consent of each
proposed nominee to serve as a director of the Corporation if so elected. The
Nominating Committee, which is comprised of Messrs. Green (Chairman), DeMichele
and Grzelecki, did not meet during 1998.
Director Compensation
From January 1, 1998 until August 5, 1998, each director who is not an
employee of the Corporation received an annual retainer of $20,000 and each
non-employee director serving as chairman of a committee of the Board of
Directors received additional committee chairman compensation of $1,000 per
year. Effective August 5, 1998 the Corporation adjusted the compensation of the
non-employee members of the Board of Directors to provide for (i) an increase in
the annual retainer fee to $25,000, (ii) the inclusion of attendance fees of
$1,000 for attendance in person at any Board of Directors meeting, $500 for
attendance by telephone at any Board of Directors meeting and $500 for
attendance at any committee meeting (excluding the Nominating Committee or any
other ad hoc committee of the Board of Directors), (iii) an increase in the
annual retainer for committee service from $1,000 to $3,000 (excluding the
Nominating Committee or any other ad hoc committee of the Board of Directors)
and (iv) an additional annual fee of $3,000 to be paid to the chairperson of
each committee (excluding the Nominating Committee or any other ad hoc committee
of the Board of Directors). In addition, each non-employee director received
reimbursement for reasonable out-of-pocket expenses incurred in attending
meetings of the Board of Directors and committees thereof. On May 21, 1998,
pursuant to the terms of the 1996 Non-Employee Director Stock Option Plan, all
non-employee directors were granted options to purchase 1,000 shares of Common
Stock at an exercise price of $29.4375 per share.
4
Section 16(a) Compliance
Section 16(a) of the Exchange Act requires certain officers and
directors and persons who own more than 10% of the Corporation's Common Stock to
report to the SEC their ownership and changes in ownership of the Corporation's
Common Stock and other equity securities on Forms 3, 4, and 5. The Corporation
has adopted procedures to assist its officers and directors in complying with
these requirements which include assisting them in preparing forms for filing.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Corporation during 1998 and Forms 5 for the year ended December
31, 1998, the Corporation believes that all Section 16(a) filing requirements
have been complied with for all Section 16 officers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Common Stock based on publicly available information as of
February 26, 1999 by: (i) each person who is the beneficial owner of more than
5% of any class of the Corporation's Common Stock; (ii) all directors of the
Corporation and nominees for director; (iii) the Chief Executive Officer of the
Corporation and the four other most highly compensated executive officers of the
Corporation in 1998; and (iv) all directors and executive officers of the
Corporation as a group.
Percent of
Name of Beneficial Owner Shares Stock
- ------------------------- ---------- ------------
Wand/Chartwell Investments L.P. (1) 868,611 8.8%
c/o Wand Partners, Inc.
30 Rockefeller Plaza, Suite 3226
New York, NY 10012
- ----------------------------
Stuart Smith Richardson (2) 659,584 6.9%
32 Bibbins Road
Easton, CT 06612
- --------------------------------
Oppenheimer Capital 527,865 5.5%
Oppenheimer Tower
World Financial Center
New York, NY 10281
- ---------------------------------------
Waddell & Reed, Inc. (3) 500,000 5.2%
6300 Lamar Avenue
Shawnee Mission, KS 66202
- ---------------------------------------
Richard E. Cole (4) 214,699 2.1%
Steven J. Bensinger (4) 151,020 1.5%
Jacques Q. Bonneau (4) 144,820 1.4%
Lunsford Richardson, Jr. (5) 91,990 *
David J. Callard (1) 53,309 *
Charles E. Meyers (4) (6) 40,408 *
Robert M. DeMichele 22,035 *
John Sagan (7) 16,885 *
Stephen L. Green (8) 6,000 *
William R. Miller 5,500 *
Greg S. Feldman 4,000 *
Frank Grzelecki 4,000 *
Stephen L. Wenman 0 *
All executive officers and directors as a
group (17 persons) (4) 1,564,826 15.2%
- ---------------------------------
*Less than 1%
5
(1) Wand/Chartwell Investments L.P. (the "Partnership") owns of record 637,926
shares of the Corporation's Common Stock, and 46,608 shares of the
Corporation's Common Stock are issuable to the Partnership upon the
exercise of warrants owned by the Partnership. Wand Partners (Chartwell)
L.P. ("Wand (Chartwell)"), the 1.0% general partner of the Partnership,
owns of record 1,600 shares of the Corporation's Common Stock, and 182,477
shares of the Corporation's Common Stock are issuable to Wand (Chartwell)
upon the exercise of warrants held by Wand (Chartwell). Wand Partners (S.C.
Inc.) Inc. ("Wand Inc.") is the 50% general partner of Wand ("Chartwell").
Mr. Callard, a director of the Corporation, owns of record 34% of the
outstanding shares of common stock of Wand Inc. As such, Mr. Callard shares
with the other shareholder of Wand Inc., investment and voting power with
respect to, and may be deemed to be the beneficial owner of, the Common
Stock and the warrants owned by the Partnership and Wand (Chartwell).
Except for Mr. Callard's 2.1138% limited partnership interest in the
Partnership and 34% common stock interest in Wand Inc., Mr. Callard
disclaims beneficial ownership of the Corporation's Common Stock and the
warrants owned by the Partnership and Wand (Chartwell). Share ownership for
Mr. Callard shown in the chart represents his pro rata ownership interest
in the Corporation's Common Stock and the warrants held by the Partnership
and Wand (Chartwell), respectively.
(2) These shares include shares of various trusts of which Mr. Richardson is a
trustee and exercises shared voting and investment power with respect to
such shares. Mr. Richardson has sole voting and investment power with
respect to 253,886 shares of the Corporation's Common Stock. Mr. Richardson
is a Richardson Stockholder; see "Certain Relationships and Related
Transactions."
(3) Waddell & Reed Financial Services, Inc., Waddell & Reed, Inc. and Waddell &
Reed Investment Management Company (collectively, the "Filing Persons"),
are parties to an agreement, dated February 12, 1999, pursuant to which
they agreed to file jointly all required Schedule 13Gs and amendments
thereto as required by Rule 13d-1 and Rule 13d-2 promulgated under the
Exchange Act relating to the aggregate ownership by each of the Filing
Persons of any voting equity security of a class which is registered
pursuant to Section 12 of the Exchange Act.
(4) Includes, with respect to each of the officers indicated, the following
numbers of options exercisable within 60 days of the date hereof: Mr. Cole
186,900; Mr. Bensinger 143,850; Mr. Bonneau 131,900 and Mr. Meyers 36,500.
With respect to all executive officers and directors as a group, includes
an aggregate of 659,775 options exercisable within 60 days of the date
hereof, 4,481 warrants held by Mr. Sagan and 656,584 shares held by Stuart
Smith Richardson, a director of the Corporation who is a trustee and
exercises shared voting and investment power with respect to such shares.
See footnote 2 above.
(5) Mr. Richardson may be deemed to be a control person of the Corporation
(other than solely by reason of being a director of the Corporation)
according to the rules of the SEC. Mr. Richardson is a Richardson
Stockholder; see "Certain Relationships and Related Transactions."
(6) Excludes 8,850 shares of the Corporation's common stock owned by Mr.Meyers'
spouse, as to which Mr. Meyers disclaims beneficial ownership.
(7) Includes 4,481 shares of the Corporation's Common Stock issuable upon the
exercise of the warrants owned by Mr. Sagan, a director of the Corporation.
(8) Mr. Green, a director of the Corporation, is a general partner of Canaan
Partners, the ultimate general partner of Canaan Capital Offshore Limited
Partnership C.V. ("Canaan Offshore") and Canaan Capital Limited Partnership
("Canaan Capital"). 178,127 shares of the Corporation's Common Stock and
warrants to purchase 11,112 additional shares are owned of record by Canaan
Offshore, and 21,343 shares of the Corporation's Common Stock and warrants
to purchase 1,331 additional shares are owned of record by Canaan Capital.
Mr. Green disclaims beneficial ownership of the Corporation's Common Stock
and the warrants owned by Canaan Offshore and Canaan Capital Share
ownership for Mr. Green shown in the chart excludes the shares of the
Corporation's Common Stock and warrants owned by Canaan Offshore and Canaan
Capital.
CERTAIN INFORMATION REGARDING THE EXECUTIVE OFFICERS
Executive Officers
The following table provides information as of the date of this Proxy
Statement regarding the executive officers of the Corporation. Biographical
information for each of the individuals set forth in the table is presented
immediately following the table (other than Messrs. Cole, Bensinger and Bonneau,
whose biographical information appears under "Election of Directors").
Name Age Title
- ------------------- ------- ----------------------------------------
Richard E. Cole 59 Chairman and Chief Executive Officer
Steven J. Bensinger 44 President
Jacques Q. Bonneau 44 Senior Executive Vice President,
Chief Underwriting Officer
James A. Giordano 46 Executive Vice President
Michael H. Hayes 45 Executive Vice President
Charles E. Meyers 49 Senior Vice President, Chief Financial Officer
John V. Del Col 37 Vice President, General Counsel and Secretary
6
James A. Giordano, head of Regional Accounts and Marine & Aviation
Accounts, has served as an Executive Vice President of the Corporation since
February 1997 and, prior thereto, as Senior Vice President since April 1990.
From December 1985 to April 1990, Mr. Giordano served as a Vice President of the
Corporation.
Michael H. Hayes, head of Global Accounts, has served as an Executive
Vice President of the Corporation since March 1990. From October 1988 to March
1990, Mr. Hayes served as Senior Vice President of the Corporation. Prior to
to October 1988, Mr. Hayes was a Vice President of Trenwick, where he was
responsible for Trenwick's treaty operations.
Charles E. Meyers has served as Senior Vice President and Chief
Financial Officer of the Corporation since October 1994 and, since July 1998,
Mr. Meyers has also served as Finance Director of Chartwell UK plc and Chartwell
Managing Agents Limited. Prior to October 1994, Mr. Meyers served as Senior Vice
President and Treasurer of the Corporation from August 1990 to October 1993 when
he became Senior Vice President, Treasurer and Chief Financial Officer of the
Corporation. In addition, he served as Secretary of the Corporation from July
1990 to October 1993. Prior thereto, he was Vice President, Accounting and
Finance of the Corporation from October 1988 to August 1990 and Assistant Vice
President, Accounting and Finance from prior to October 1988.
John V. Del Col has served as Vice President, General Counsel and
Secretary since January 1998. From July 1994 until December 1997, Mr. Del Col
was the Deputy General Counsel and Assistant Secretary at MeesPierson Holdings
Inc., a Dutch merchant bank. From November 1991 until July 1994, Mr. Del Col
was an associate in the law firm LeBoeuf, Lamb, Greene & MacRae. Prior thereto,
Mr. Del Col was an associate in the law firm Sullivan & Cromwell.
Employment Agreements
On December 30, 1998, the Corporation amended the employment agreements
with Messrs. Cole, Bensinger and Bonneau (as amended, the "Employment
Agreements") extending the termination date of each agreement from December 31,
1998 to December 31, 1999. The Employment Agreements provide for annual base
salaries (which may be increased at the discretion of the Corporation's Board of
Directors) of $425,000, $375,000 and $300,000, respectively, during 1999. Under
the terms of the Employment Agreements, bonus awards will be payable to these
employees, at the sole discretion of the Corporation's Board of Directors, in an
amount of 0-50% of base salary if annual results are less than the Corporation's
business plan for such year and 50-100% of base salary if results equal or
exceed such annual plan.
Messrs. Cole, Bensinger and Bonneau will also receive a supplement to
the Corporation's Section 401(k) Plan payable at the earlier of age 65 or
employment termination. The supplement will be equal to the aggregate
contributions made with respect to the employee to a trust established by the
Corporation. Annual contributions to the trust will equal 20% of the year's base
salary for Mr. Cole and 13 1/2% of salary for Messrs. Bensinger and Bonneau.
The employees will also be provided with certain other benefits and perquisites
pursuant to the Employment Agreements.
Upon a termination of the employee's employment by the Corporation
without "Cause" or by the employee for "Good Reason" (each as defined in the
Employment Agreements), the Corporation will be obligated to pay the employee's
base salary for three years and maintain certain benefits for two years. If such
termination occurs following a "Change in Control" as defined in the Employment
Agreements, a lump sum payment will be made equal to the amount described in the
immediately preceding sentence plus an amount equal to the highest annual bonus
received by the employee during the two fiscal years immediately preceding the
Change of Control or the highest annual bonus received by the employee after the
Change of Control, whichever is greater.
In the event any payments to an employee under the Employment
Agreements are subject to an excise tax under Section 4999 of the Internal
Revenue Code of 1986, the Corporation will reimburse the employee so that the
employee will retain an after-tax benefit as if the excise tax had not been
incurred; provided, however, that in the event a Change in Control triggers a
lump sum payment to the employee as described in the preceding paragraph, the
employee's lump sum payment shall include only that portion of the bonus which
would not result in the assessment of an excise tax.
7
Each employee is subject under the terms of his Employment Agreement to
a non-competition provision during the term of his employment and for up to one
year thereafter under certain circumstances and to ongoing confidentiality
obligations. Although there is no obligation to mitigate severance benefits,
certain amounts received from a new employer will reduce the Corporation's
obligations under the Employment Agreements.
Change in Control Severance Agreements
The Corporation has entered into change in control severance agreements
(the "Change in Control Agreements") with the executive vice presidents, senior
vice presidents and vice presidents of the Corporation. The Corporation entered
into the Change in Control Agreements in order to reinforce and encourage the
continued dedication and attention of its senior personnel to their assigned
duties without distractions arising from a potential change in control and to
retain senior personnel in the event of a potential change in control and
thereby protect the assets of the Corporation. Mr. Meyers is a party to a Change
in Control Agreement.
In the Change in Control Agreements, upon the termination of an
employee's employment by the Corporation without "Cause" or by the employee for
"Good Reason" within two years after a "Change in Control" (each as defined in
the Change in Control Agreements), the Corporation will be obligated to make a
lump sum payment to the employee equal to between one and two year's salary and
maintain certain benefits for one year.
In the event any payments to an employee under the Change in Control
Agreements would be subject to an excise tax under Section 4999 of the Internal
Revenue Code of 1986, the payments would be reduced by an amount which would
result in no application of such excise tax.
Executive Officer Compensation
The following table sets forth the cash and non-cash compensation with
respect to the fiscal years ended December 31, 1998, 1997 and 1996 awarded to or
earned by the Chief Executive Officer of the Corporation and the four other most
highly compensated executive officers of the Corporation and its subsidiaries:
Summary Compensation Table
Long Term
Annual Compensation Compensation
--------------------------------- ---------------------------
Other Securities
Annual Underlying All Other
Salary Bonus Compensation Options Compensation
Year (1)(2)($) (2)($) (3)($) (#) (2)(4)($)
----- --------- ------ ------------ ---------- -------------
Richard E. Cole 1998 $437,866 $106,250 $125,245 60,000 $119,127
Chairman & Chief 1997 444,609 212,500 70,434 40,000 144,765
Executive Officer 1996 442,443 403,750 151,355 28,500 96,086
Steven J. Bensinger 1998 $380,403 $153,750 $234,832 50,000 $ 70,014
President 1997 378,239 187,500 63,257 35,000 58,861
1996 388,809 356,250 138,581 26,000 58,580
Jacques Q. Bonneau 1998 $308,553 $75,000 $ 53,860 55,000 $ 54,936
Sr. Executive Vice 1997 323,457 150,000 66,800 30,000 50,546
President and Chief 1996 300,000 285,000 79,580 23,000 49,263
Underwriting Officer
Stephen L. Wenman 1998 $309,375 --- --- 20,000 $317,099
Chief Executive 1997 $320,481 206,250 --- 30,000 ---
Chartwell Managing 1996 --- --- --- --- ---
Agents Limited
Charles E. Meyers 1998 $208,286 $ 65,000 $ 63,758 3,000 $ 4,800
Sr. Vice President 1997 182,692 70,000 51,674 10,000 4,750
and Chief Financial 1996 176,887 125,000 9,608 10,000 4,500
Officer
8
(1) Includes payment for unused vacation.
(2) Mr. Wenman's salary, bonus and other compensation were paid in British
pounds sterling. For purposes of this table, such amounts have been
converted into United States dollars at a rate of (pound)1=$1.65.
(3) Consists of personal benefits provided by the Corporation for the indicated
calendar years in which the amounts exceeded the lesser of $50,000 or ten
percent of the named executive's combined salary and bonus for the year.
Includes (a) reimbursement for certain United Kingdom taxes equal to
$95,444 and $42,785 for Messrs. Bensinger and Meyers, respectively, in
1998, (b) automobile expenses and reimbursement of related taxes of
$64,336, $79,940 and $26,146 for Messrs. Cole, Bensinger and Bonneau,
respectively, in 1998 and (c) club expenses of $17,052 for Mr. Bonneau in
1998.
(4) Includes (a) Corporation matching contributions to the Corporation's 401(k)
Savings Plan on behalf of each of Messrs. Cole, Bensinger, Bonneau and
Meyers of $4,800 in 1998, (b) Corporation contributions to the Trust under
Chartwell Re Corporation Employment Agreements in the amounts of $85,000,
$50,625 and $40,500 for Messrs. Cole, Bensinger and Bonneau, respectively,
in 1998, (c) term life insurance policy premiums and related tax
adjustments of $29,327, $14,589 and $9,636 for Messrs. Cole, Bensinger and
Bonneau, respectively, in 1998 and (d) a $317,099 severance payment made to
Mr. Wenman upon his resignation in 1998.
Option Grants in Last Fiscal Year
Summarized below in tabular format are options granted during the fiscal
year ended December 31, 1998 to the executive officers named in the Summary
Compensation Table:
Potential Realized
Value
at Assumed Annual
% of Total Rates of
Options Stock Price
Granted to Appreciation
Employees Exercise for Option Term
Options in Fiscal Price Expiration ------------------
Name Granted Year ($/Sh) Date 5% 10%
- ------------------- ------- -------- -------- -------- -------- ----------
Richard E. Cole 25,000 8.1% $30.6875 2/11/03 $211,960 $468,376
35,000 11.4% $28.7500 8/5/08 $632,825 1,603,703
Steven J. Bensinger 20,000 6.5% $30.6875 2/11/03 $169,568 $374,701
30,000 9.8% $28.7500 8/5/08 $542,422 $1,374,603
Jacques Q. Bonneau 20,000 6.5% $30.6875 2/11/03 $169,568 $374,701
25,000 8.1% $28.7500 8/5/08 $452,018 $1,145,502
Stephen L. Wenman 20,000 6.5% $30.6875 2/11/03 $169,568 $374,701
Charles E. Meyers 3,000 1.0% $28.7500 8/5/08 $54,242 $137,460
- -------------------------------------
Fiscal Year-End Option Values
None of the executive officers named in the Summary Compensation Table
exercised any options during the fiscal year ended December 31, 1998. Set forth
below are the number of outstanding options at December 31, 1998 granted to each
of the executive officers named in the Summary Compensation Table:
Number of Unexercised Value of Unexercised
Options In-the-Money
at Fiscal Year-End Options (1)
---------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
Richard E. Cole 174,400 107,100 $420,750 $0
Steven J. Bensinger 133,850 91,850 $315,425 $0
Jacques Q. Bonneau 121,900 81,300 $289,300 $0
Stephen L. Wenman 5,000 0 $0 $0
Charles E. Meyers 36,500 16,500 $82,500 $0
(1) Based on closing price of $23.75 per share for the Corporation's Common
Stock on December 31, 1998.
9
Compensation Committee Report on Executive Compensation
Decisions regarding aggregate compensation of the executive officers of
the Corporation, including compensation in the form of cash bonuses and
equity-based awards, are made by the Compensation Committee of the Board of
Directors. During 1998, the Compensation Committee consisted of Frank E.
Grzelecki, David J. Callard and Stuart S. Richardson. None of the members of the
Compensation Committee are employees of the Corporation or any of its
subsidiaries. Decisions by the Compensation Committee regarding executive
compensation are submitted, as appropriate, to the other non-employee members of
the Board of Directors for approval.
The Compensation Committee has implemented compensation policies, plans
and programs that are designed to attract, retain, motivate and reward executive
officers whom the Corporation expects to make significant contributions to the
Corporation's performance. To that end, the Corporation currently provides
executive officers with competitive salaries, cash bonuses based upon objective
criteria and equity-based awards principally in the form of stock options. The
Compensation Committee periodically evaluates the Corporation's performance,
executive compensation and executive share ownership compared with those of
other comparable United States reinsurance companies in making its decisions. In
1996, the Compensation Committee engaged William M. Mercer Inc. to assist in
evaluating the competitiveness of the Corporation's compensation program.
To the extent readily determinable and as one of the factors in the
consideration of compensation matters, the Compensation Committee considers the
anticipated tax treatment to the Corporation and the executives of various
payments and benefits. Section 162(m) of the Internal Revenue Code of 1986
limits federal income tax deductions for compensation paid to the Chief
Executive Officer and the four other most highly compensated officers of a
public company to $1,000,000 per year, subject to an exception for
performance-based compensation arrangements which satisfy certain conditions.
Total compensation of the Corporation's executive officers did not exceed this
deduction limitation in 1998. In the future, the Compensation Committee will
consider various alternatives for preserving the deductibility of compensation
payments and benefits to the extent reasonably practicable and to the extent
consistent with its other compensation objectives.
Base Salary. Each year the Chief Executive Officer recommends to the
Compensation Committee a base salary for certain executive officers including,
but not limited to, the executive officers named in this Proxy Statement, other
than the Chief Executive Officer, the President, and the Chief Underwriting
Officer, whose salaries are set by the Compensation Committee and reflected in
their employment contracts. These salary recommendations are based on each
executive officer's individual performance over the past year, annual corporate
performance, industry salary trends and competitive salary levels. Base salary
decisions also take into account the Compensation Committee's views as to the
emphasis to be placed on variable, performance-based compensation. The
Compensation Committee reviews the recommendations of management and fixes the
base salaries of each executive officer, subject to approval by the full Board
of Directors.
Annual Bonus Plan. The Board of Directors of the Corporation adopted a
bonus plan for all officers of the Corporation in February 1994. The bonus plan
permits the Compensation Committee to award cash bonuses ranging from 0% to 100%
of base salary for any given year based on (i) officer level, (ii) the
Corporation's business plan results for the past year, including achievement of
budget goals, including, but not limited to, overhead expenses, growth in
premiums and return on investment, and achievement of strategic goals, and (iii)
the overall business climate in the reinsurance industry. The bonus plan calls
for bonuses in the lower end of the ranges to be awarded in years when lower
returns on investment are experienced and in the higher end of the ranges during
years when returns on investment should be greater.
Each year the Chief Executive Officer recommends to the Compensation
Committee a bonus for all eligible officers. In January 1999, the Compensation
Committee determined to recommend to the full Board of Directors that Messrs.
Cole and Bonneau receive bonuses of 25% of base salary, Mr. Bensinger receive a
bonus of 41% of base salary and all other eligible officers receive bonuses
ranging from 1.9% to 36.1% of base salary. In determining the bonus levels for
1998, the Compensation Committee considered the achievement of budget goals and
also recognized the contributions of each officer to the corporation's
performance in 1998 as well as the Corporation's stock performance during the
year. The non-employee members of the Board of Directors approved the bonuses as
recommended by the Compensation Committee in February 1999.
10
Stock Options. The Compensation Committee administers the 1997 Omnibus
Stock Incentive Plan (the "Plan") which provides for the issuance of options to
purchase up to 907,000 shares of Common Stock. The primary purpose of the Plan
is to provide additional incentive to executive officers to further the growth,
development and financial success of the Corporation and to align officers'
interests with those of the Corporation's stockholders. The Compensation
Committee has a policy of considering annual grants under the Plan to executive
officers. In 1998, the Compensation Committee granted options to purchase
307,500 shares of the Common Stock to officers of the Corporation and its
subsidiaries. In making grants, the Compensation Committee also considered the
number of options remaining available for grant under the Plan and the aggregate
amount of options previously granted.
Chief Executive Compensation. Pursuant to the terms of his employment
agreement, the Corporation's Chief Executive Officer, Richard E. Cole, received
$425,000 in base salary in 1998, which represents no increase over his base
salary for 1997. In February 1999, the Compensation Committee granted an award
to Mr. Cole under the Corporation's bonus plan of $106,250, or 25% of his 1998
base salary. In addition, under the Plan in 1998, Mr. Cole was awarded 25,000
options with an exercise price of $30.6875 and 35,000 options with an exercise
price of $28.75. In each case, the exercise price was the fair market value of
the Corporation's Common Stock on the date of grant.
Frank E. Grzelecki
David J. Callard
Stuart S. Richardson
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Corporation's Common Stock with the cumulative total return of the Standard
& Poor's 500, the Standard & Poor's Property-Casualty Index and a custom peer
group, in each case since December 13, 1995, the date on which the Corporation's
Common Stock commenced trading
11
Chartwell Re Custom S&P Property-
Period Ending Corporation S&P 500 Peer Index Casualty Index
December 13, 1995 100.00 100.00 100.00 100.00
December 31, 1995 104.76 99.16 104.17 99.97
June 30, 1996 105.55 109.16 103.51 104.35
December 31, 1996 128.04 121.83 113.79 122.03
June 30, 1997 144.01 146.93 149.47 148.30
December 31, 1997 162.41 162.48 157.34 173.99
June 30, 1998 142.04 191.26 162.11 176.57
December 31, 1998 114.93 208.92 156.59 158.24
Custom Peer Index includes: Everest Reinsurance Holdings, Inc., NAC Re Corp.,
Transatlantic Holdings, Inc. and Trenwick Group Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stockholders Agreement
In connection with the December 1995 merger of Piedmont with and into
the Corporation (the "Merger"), the Corporation entered into the Stockholders
Agreement with certain of its stockholders, including Virginia Retirement System
("VRS"), Institutional Venture Capital Fund II ("IVCF II"), Michigan Mutual
Insurance Company ("MMIC"), FIMA Finance Management Inc. ("FIMA") and
Wand/Chartwell Investments L.P. (collectively, the "Chartwell Stockholders"),
and Messrs. L. Richardson, Jr., S. Richardson, S. Boney, L.R. Preyer, P.L.
Richardson and R.R. Richardson, each of whom was a director of Piedmont, and
certain other stockholders who are relatives of the foregoing, or which are
trusts with respect to which the foregoing or such relatives are trustees or
hold beneficial interests, as well as a charitable organization established by
relatives of the foregoing (collectively, the "Richardson Stockholders"). The
Stockholders Agreement addresses certain matters relating to the control of the
Corporation after the Merger.
The Stockholders Agreement contains certain "standstill" provisions
intended to restrict the ability of any party to increase significantly its
present share of control over the Corporation. Pursuant to the standstill
provisions, the Chartwell Stockholders and the Richardson Stockholders are each
prohibited from engaging in certain actions, including the following: (i) during
the six month period commencing upon the effective time of the Merger,
purchasing additional shares of the Common Stock or other voting securities of
the Corporation, except that such stockholders may purchase additional shares of
the Common Stock up to certain individual and aggregate thresholds prescribed by
the Stockholders Agreement; and (ii) for three years following the effective
time of the Merger, depositing any shares of the Common Stock or other voting
securities of the Corporation into a voting trust or subjecting any such
securities to any arrangement or agreement (other than the Stockholders
Agreement) with respect to the voting of such securities, subject to specified
exceptions.
The Stockholders Agreement contains provisions giving the Richardson
Stockholders certain rights with respect to representation on the Corporation's
Board of Directors. Upon consummation of the Merger, the Richardson Stockholders
were entitled to designate four persons to be nominated for election to the
Corporation's Board of Directors.
Pursuant to the provisions of the Stockholders Agreement, the number of
persons that the Richardson Stockholders may designate will be permanently
reduced if the Richardson Stockholders hold less than 16% of the outstanding
Common Stock, such that (i) if the Richardson Stockholders hold less than 16%
but equal to or greater than 12% of the Common Stock, they will be entitled to
three designees; (ii) if the Richardson Stockholders hold less than 12% but
equal to or greater than 8% of the Common Stock, they will be entitled to two
designees; (iii) if the Richardson Stockholders hold less than 8% but equal to
or greater than 5% of the Common Stock, they will be entitled to one designee;
or (iv) if the Richardson Stockholders hold less than 5% of the Common Stock,
they will have no further designation rights. Initially, Stuart Smith Richardson
will exercise the designation rights of the Richardson Stockholders.
Currently, the Richardson Stockholders hold less than 16% but more than
12% of the Corporation's outstanding Common Stock. As a result, the Richardson
Stockholders are currently entitled to designate three persons to be nominated
for election to the Board of Directors. Directors L. Richardson, Jr., S.
Richardson and DeMichele are the current designees of the Richardson
Stockholders. None of the directors designated by the Richardson Stockholders
are standing for reelection at this year's Annual Meeting.
12
The designees of the Richardson Stockholders will be recommended by the
nominating committee of the Corporation's Board of Directors to the full Board
of Directors for inclusion in the Corporation's slate of nominees for election.
Each party to the Stockholders Agreement agrees to vote its shares in favor of
the slate proposed by the Corporation, subject to the right of the Chartwell
Stockholders to be released from this voting obligation upon their ownership
interests in the Corporation declining below certain specified thresholds. As a
result of the Corporation's public offering of its Common Stock on March 8,
1996, the ownership interest of each of VRS, IVCF II, MMIC and FIMA has fallen
below such specified level, and therefore, each entity has been released from
its voting obligation. In the event that any designee of the Richardson
Stockholders ceases to serve as a director, the Richardson Stockholders will
have the right to designate another person for election to the Corporation's
Board of Directors.
If at any time (i) a designee of the Richardson Stockholders is sitting
on the Corporation's Board of Directors and (ii) the board of directors of any
principal U.S. subsidiary of the Corporation has any member who is not an
officer or employee of the Corporation or any of its subsidiaries, the
Corporation will cause one designee of the Richardson Stockholders that is
sitting on the Corporation's Board of Directors to be elected to the board of
directors of such subsidiary.
With certain limited exceptions, any party or parties to the
Stockholders Agreement proposing to sell a number of shares of the Common Stock
representing 30% or more of the then outstanding Common Stock in one or a series
of related transactions must provide written notice to the other parties of the
proposed action at least fifteen days before the proposed date of sale. Within
ten days of the receipt of such notice any other party may inform the party
proposing to sell the shares that such other party desires to sell shares to the
prospective buyer on the same terms and conditions set forth in the notice and,
upon giving notice, such other party will be entitled to participate on a
pro-rata basis in the sale of the shares.
Amendments to and modifications of the Stockholders Agreement may only
be made by written consent of the Corporation and other parties to the
Stockholders Agreement holding not less than 66 2/3% of the Common Stock then
subject to the Stockholders Agreement, except that any amendment, modification
or other change to the Stockholders Agreement that affects the nomination or
agreement to vote for the directors designated by the Richardson Stockholders
requires the consent of 66 2/3% of the outstanding shares of the Common Stock
held by the Richardson Stockholders.
The Stockholders Agreement became effective as of the effective time of
the Merger and will continue in effect (subject to the earlier termination of
certain provisions as described above) until (i) the written consent of all
parties to the agreement is obtained, (ii) the Corporation is dissolved or
liquidated, (iii) the date which is the later of (A) the date on which
settlement of the Corporation's CI Notes due 2006 occurs and (B) the first date
on which the total number of shares of the Common Stock held by the Richardson
Stockholders represents less than ten percent of the then issued and outstanding
the Common Stock, or (iv) eleven years from the date of the Stockholders
Agreement.
Registration Rights Agreement
In connection with the Merger, the Corporation entered into the
Registration Rights Agreement with the Chartwell Stockholders, the Richardson
Stockholders and a majority of the Corporation's other stockholders prior to the
Merger. Pursuant to the Registration Rights Agreement, at any time after the
Merger, upon the request of stockholders holding at least 400,000 shares of the
Common Stock or any security convertible into 400,000 shares of the Common
Stock, the Corporation must, subject to certain limited exceptions, use its best
efforts to register such shares under the Securities Act of 1933, as amended.
The Corporation is not obligated to effect more than one registration in any
nine-month period or more than four during the term of the Registration Rights
Agreement. The Richardson Stockholders have the right to initiate two of the
four registrations effected pursuant to the Registration Rights Agreement. The
Corporation will pay all registration expenses in connection with the four
registrations except underwriting discounts and commissions and transfer taxes.
If the registration is in the form of an underwritten offering, the stockholders
holding a majority of the shares of the Common Stock being registered pursuant
to the registration may select the underwriters, subject to the Corporation's
approval.
13
Parties to the Registration Rights Agreement have "piggyback" rights to
register shares of the Common Stock in connection with registration of equity
securities by the Corporation. These rights are subject to limitation if the
registration involves an underwritten offering and the managing underwriter
determines that, in its good faith view, the inclusion of all or any portion of
such additional securities in the registration would have a material adverse
effect on the offering.
Indemnification; Insurance
The Corporation has generally agreed to indemnify the former officers
and directors of Piedmont in respect of acts or omissions occurring prior to the
effective time of the Merger (including, but not limited to, the transactions
contemplated by the Merger Agreement pursuant to which the Merger was effected)
to the extent provided under Piedmont's certificate of incorporation and by-laws
as in effect on the date of the Merger Agreement, in each case subject to any
limitation imposed by applicable law. In addition, the Corporation has agreed to
maintain Piedmont's existing directors' and officers' liability insurance for
six years from the Merger, subject to certain limitations.
AUDITORS
Representatives of Deloitte & Touche LLP, independent public auditors for
the Corporation for fiscal 1998 and the current fiscal year, will be present at
the Annual Meeting, will have an opportunity to make a statement, and will be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order for a proposal by a stockholder of the Corporation to be
eligible to be included in the Corporation's Proxy Statement and proxy card for
the 2000 Annual Meeting of Stockholders, the proposal must be received in proper
form (containing certain information specified in the Bylaws) by the Secretary
of the Corporation at the Corporation's principal executive offices no later
than December 2, 1999.
Under the Corporation's Bylaws, no business may be brought before an
Annual Meeting of Stockholders except as specified in the notice of the meeting
or as otherwise properly brought before the meeting by or at the direction of
the Board of Directors or by a stockholder entitled to vote, who has delivered
written notice to the Secretary of the Corporation (containing certain
information specified in the Bylaws) not less than 60 days nor more than 90 days
prior to the anniversary date of the immediately preceding Annual Meeting of
Stockholders. For the 2000 Annual Meeting of Stockholders, such written notice
must be received by the Secretary of the Corporation on or prior to March 21,
2000 and no earlier than February 20, 2000. Absent receipt of proper stockholder
notice during the specified time period, the proxies designated by the Board of
Directors of the Corporation for the 2000 Annual Meeting of Stockholders may
vote in their discretion on any proposal any shares for which they have been
appointed proxies without mention of such matter in the Corporation's Proxy
Statement for such meeting or on the proxy card for such meeting.
MISCELLANEOUS INFORMATION
The Corporation will bear the cost of preparing, assembling and mailing
the enclosed Proxy, this Proxy Statement and other material which may be sent to
stockholders in connection with this solicitation. Proxies will be solicited on
behalf of the Corporation by Corporate Investor Communications, Inc. ("CIC") for
a fee of approximately $4,500 plus reasonable out of pocket expenses. CIC may
solicit proxies by mail, personal interview, telephone and telegraph. In
addition, proxies may be solicited by mail, personal interview, telephone and
telegraph by directors, officers and employees of the Corporation and its
subsidiaries without receiving additional compensation. The Corporation will
also request brokers and other nominees to forward soliciting material to the
beneficial owners of shares which are held of record by them and may reimburse
such persons for expenses incurred in connection with the forwarding of such
material.
14
Copies of the 1998 Annual Report on Form 10-K are being mailed to the
stockholders simultaneously with this Proxy Statement. The financial statements
and financial information appearing in such Form 10-K are incorporated herein by
reference.
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors,
/s/ John V. Del Col
------------------------------------
John V. Del Col
Secretary
Dated: March 31, 1999
15
================================================================================
ANNUAL REPORT ON FORM 10-K
The Corporation's Annual Report on Form 10-K and the 1998 Annual Report to
Stockholders were mailed simultaneously herewith. Upon written request, the
Corporation will provide, without charge, additional copies of its Form 10-K
without Exhibits, as filed with the Securities and Exchange Commission, for the
fiscal year ended December 31, 1998. Copies of the Exhibits will be furnished at
the Corporation's cost for the reproduction, postage and handling thereof.
Stockholders may request such materials by writing to the Investor Relations
Department, Chartwell Re Corporation, Four Stamford Plaza, P.O. Box 120043,
Stamford, CT 06912-0043, or by calling 203-705-2500.
================================================================================
16
APPENDIX A
PROXY
CHARTWELL RE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Revoking any such prior appointments, the undersigned hereby appoints
Richard E. Cole and Steven J. Bensinger, and each of them, with full power of
substitution, as proxies to represent and to vote the shares of common stock of
Chartwell Re Corporation (the "Corporation") held of record on March 26, 1999 by
the undersigned at the Annual Meeting of Stockholders of the Corporation to be
held at 9:00 a.m. Eastern Standard Time, Thursday, May 20, 1999 at the offices
of the Corporation, Four Stamford Plaza, 107 Elm Street, 15th Floor, Stamford,
Connecticut 06902, and at any adjournment thereof. The proxies are to vote the
shares of the undersigned as instructed below and on the reverse side and in
accordance with their judgement on all other matters which may properly come
before the Annual Meeting, all in accordance with the accompanying Notice of
Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged by
the undersigned.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
X Please mark
- -- vote as in this
example
IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS.
The Board of Directors Recommends a Vote FOR the nominees for election as
directors.
1. Election of Directors
Nominees: David J. Callard, Richard E. Cole and William R. Miller
___ For all nominees ___ Withheld from all nominees
- ---------------------------------------
Instruction: To withhold authority to vote for any individual nominee
please print that nominee's name on the line above.
Please sign, date and mail this Proxy Card in the enclosed envelope. No
postage is required if mailed in the United States.
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When sigining as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If corporation or partnership, please sign
in full corporate or partnership name by
authorized officer or signatory.
Signature:______________ Date:_______ Signature:_______________ Date:_______