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EXHIBIT 10(a)
GENERAL RE CORPORATION
1995 LONG-TERM COMPENSATION PLAN
EFFECTIVE JANUARY 1, 1995
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GENERAL RE CORPORATION
1995 LONG-TERM COMPENSATION PLAN
1. PURPOSE.
This 1995 Long-Term Compensation Plan (the "Plan") of General
Re Corporation, a Delaware corporation (the "Company") is intended to encourage
stock ownership by certain officers, key employees and Non-Employee Directors
of the Company or any Subsidiary, to encourage such employees to remain in the
employ of the Company or its Subsidiaries and to have a proprietary interest in
the success of the Company. Toward this objective, the Committee may grant
Awards consisting of Stock Options, Approved Stock Options, Stock Appreciation
Rights, Restricted Stock, Share Units, and Bonuses under the Plan.
2. DEFINITIONS.
For the purposes of this Plan:
(a) "AWARD" means any form of incentive or performance
award granted under the Plan, whether singly or in combination, to a
Grantee by the Committee pursuant to such terms, conditions,
restrictions and/or limitations (if any) as the Committee may
establish by the Award Notice or otherwise. Awards granted under the
Plan may consist of:
(1) "Annual Incentive Bonuses" or "Long-Term Performance
Bonuses" (collectively, "Bonuses") granted pursuant
to Section 6(c);
(2) "Approved Stock Options" granted under the United
Kingdom Sub-Plan of the Plan;
(3) "Restricted Stock" granted pursuant to Section 6(d);
(4) "Share Units" granted pursuant to Section 6(c) and
6(e);
(5) "Stock Appreciation Rights" or "SARs" granted
pursuant to Section 6(b); and/or
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(6) "Stock Options" granted pursuant to Section 6(a).
(b) "AWARD NOTICE" means the written notice from the
Committee to a Grantee that establishes the terms, conditions,
restrictions and/or limitations (if any) applicable to an Award.
(c) "AWARD PERIOD" means the period established by the
Committee over which the attainment of incentive or performance goals
shall be measured. With respect to Annual Incentive Bonuses, such
Award Period shall be a fiscal year. With respect to Long-Term
Performance Bonuses, such Award Period shall consist of not less than
three nor more than five consecutive fiscal years.
(d) "CHANGE IN CONTROL" occurs if (i) any person,
including a "group" as defined in Section 13(d)(3) of the Exchange
Act, shall become the beneficial owner of shares of the Company with
respect to which 20% or more of the total number of votes for the
election of the Board of Directors of the Company may be cast; (ii) as
a result of, or in connection with, any cash tender offer, exchange
offer, merger or other business combination, sale of assets or
contested election or combination of the foregoing, the persons who
were prior to the institution thereof directors of the Company shall
cease to constitute a majority of the Board of Directors of the
Company; or (iii) stockholders of the Company shall approve an
agreement pursuant to which the Company will cease to be an
independent publicly owned corporation or for a sale or other
disposition of all or substantially all of the assets of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as
amended.
(f) "COMMITTEE" means the Compensation Committee of the
Board of Directors of the Company, as described in Section 3 hereof.
(g) "COMMON STOCK" means the common stock, par value
$0.50 per share, of the Company.
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(h) "DISABLED" or "DISABILITY" means having a physical
or mental condition that renders the Grantee incapable of performing
the work for which the Grantee was employed or similar work and that
qualifies the Grantee for benefits under a Company-sponsored or
Subsidiary-sponsored long-term disability plan.
(i) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(j) "EXERCISE PRICE" means the price at which each
Incentive Stock Option and Nonqualified Stock Option granted under the
Plan can be exercised.
(k) "FAIR MARKET VALUE" shall be deemed to be, on a per
share basis, the mean between the opening and closing sales price of
Common Stock on the Composite Tape for New York Stock Exchange-listed
stocks on the date as of which the determination is being made or, if
no sales were reported on such date, on the next preceding day on
which there were sales of Common Stock so reported.
(l) "GRANT DATE" shall mean the date on which the Award
is authorized by the Committee or such later date as may be specified
by the Committee in such authorization.
(m) "GRANTEE" shall mean any person to whom an Award
has been granted.
(n) "INCENTIVE STOCK OPTION" means an Award granted
pursuant to Section 6(a) hereof consisting of an option which meets
the requirements of Section 422 of the Code.
(o) "NON-EMPLOYEE DIRECTOR" shall mean each member of
the Board of Directors of the Company who is not also an employee of
the Company.
(p) "NON-QUALIFIED STOCK OPTION" means an Award granted
pursuant to Section 6(a) hereof consisting of an option which is not
an Incentive Stock Option nor an Approved Stock Option.
(q) "PARENTAL LEAVE OF ABSENCE" means a leave of absence
by an employee from active employment, due to the
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birth of a child, placement of a child with the employee in connection
with adoption of such child by the employee, or caring for a child
immediately following such birth or placement for adoption, provided
that the absence from employment does not exceed twelve (12)
consecutive months, excluding the period of absence in which the
employee is on short-term disability due to pregnancy.
(r) "RELATIVE TOTAL RETURN TO SHAREHOLDERS" means
the comparison of the total return to shareholders including
reinvestment of dividends on General Re Corporation Common Stock versus
the total return an individual could have received if the individual
had invested in an index comprised of the Standard & Poors 500 and a
group of property/casualty, multiline insurance and/or reinsurance
companies as determined from time to time by the Committee.
(s) "REPORTING PERSON" means a Grantee who is subject
to the reporting requirements of Section 16(a) of the Exchange Act.
(t) "SHARE UNIT" means the accounting entry maintained
by the Company for the purpose of reflecting the Company's unsecured
and unfunded promise to deliver one share of Common Stock to the
Grantee at the time and on the conditions set forth in Section 6(e).
(u) "RESTRICTED STOCK OPTION" means any Stock Option
where the Common Stock issuable thereunder is subject to such
restrictions as to the transfer and sale thereof as shall be set forth
in the Award Notice.
(v) "SUBSIDIARY" means any corporation of which at
least 50% of the voting stock is owned, directly or indirectly, by the
Company.
(w) "TERMINATION OF EMPLOYMENT" means the earliest
date on which an employee shall no longer be employed by the Company
or any Subsidiary. Whether an authorized leave of absence or absence
on military or government service shall constitute Termination of
Employment for purposes of this Plan shall be determined by the
Committee. Unless otherwise specified hereunder, retirement shall be
considered to mean any retirement pursuant to any applicable
retirement plan of
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the Company or any of its Subsidiaries. A Parental Leave of Absence
shall not constitute Termination of Employment for purposes of this
Plan provided that the employee returns to active employment with the
Company or any Subsidiary within twelve (12) consecutive months after
the date the Parental Leave of Absence began. In the event that an
employee does not return to active employment on or before the twelve
(12) month anniversary date of the date the Parental Leave of Absence
began, the employee shall have three (3) months following the
anniversary date of the Parental Leave of Absence within which to
exercise all Stock Options that are exercisable through the employee's
date of termination.
For purposes of the Plan, discharge for cause shall mean
Termination of Employment by the Employer which the Committee, in its
discretion, determines to be for cause, including any separation from
service by the Grantee from his employer which is effected by reason
of fraud, deceit, or other gross misconduct by the Grantee performed
within the scope of his employment. "Termination for good reason"
means any separation from service because of the involuntary
assignment of the Grantee to duties materially different from his
position prior to such Change in Control, a reduction of the Grantee's
salary which is greater than ten percent of the Grantee's salary at
the annual rate in effect at the time of the Change in Control, or the
relocation of the Grantee's regular assigned workplace by more than 25
additional miles from residence.
(x) "UNITED KINGDOM SUB-PLAN" means that portion of the
Plan applicable to persons described in Section 4(b) hereof. The
United Kingdom Sub-Plan is attached hereto as Appendix A.
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3. ADMINISTRATION.
(a) THE COMMITTEE. The Plan shall be administered by
the Committee. The Committee shall consist of not less than three
members of the Company's Board of Directors who shall be ineligible to
receive Awards under the Plan or stock options or rights under any
other plan of the Company or any of its Subsidiaries (unless the Board
of Directors determines that such options or rights can be granted
pursuant to the Plan or under another plan without adversely affecting
the Committee's status as "disinterested" for purposes of Rule 16b-3
under the Exchange Act) and who shall qualify as "outside directors"
for purposes of Section 162(m) of the Code. The Board of Directors
may fill any Committee vacancy and may remove any member of the
Committee at any time with or without cause.
(b) AUTHORITY OF THE COMMITTEE. The Committee shall
have the authority to (1) interpret the Plan; (2) establish such rules
and regulations as it deems necessary for the proper operations and
administration of the Plan; (3) select key executive and managerial
employees to receive Awards under the Plan; (4) establish and
administer performance objectives in connection with Awards made under
the Plan, and certify that such performance objectives have been met;
(5) determine the form of an Award, the number of shares of Common
Stock or Share Units subject to the Award, all the terms, conditions,
restrictions and/or limitations, if any, of an Award, including the
time and conditions of exercise or vesting, and the terms of any Award
Notice, which may include the waiver or amendment of prior terms and
conditions or acceleration or early vesting or payment of an Award
under certain circumstances determined by the Committee; (6) determine
whether Awards would be granted singly, in combination or in tandem;
(7) grant waivers of Plan terms, conditions, restrictions, and
limitations; (8) accelerate the vesting, exercise, or payment of an
Award or the Award Period when such action or actions would be in the
best interest of the Company; (9) reduce the amount of any Award based
upon any additional corporate performance, individual performance or
other factors, circumstances or events which the Committee deems
relevant; (10) prescribe, amend and rescind rules and regulations
relating to the Plan; and (11) take any and all other action it deems
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necessary or advisable for the proper operation or administration of
the Plan. All determinations of the Committee shall be made by a
majority of its members, and its determinations shall be final,
binding and conclusive. No member of the Committee shall be liable
for any action, interpretation or construction made in good faith with
respect to the Plan or any Award thereunder. The Committee, in its
discretion, may delegate its authority and duties under the Plan to
the Chief Executive Officer and/or to other senior officers of the
Company under such conditions and/or subject to such limitations as
the Committee may establish; provided, however, that only the
Committee may select, grant and certify Awards to Reporting Persons
and to persons whose compensation is subject to Section 162(m) of the
Code.
4. ELIGIBILITY.
(a) The persons who shall be eligible to receive Awards
pursuant to this Plan are:
(1) key executive and managerial employees (including
officers, whether or not they are directors) of the
Company or of any Subsidiary, as the Committee shall
from time to time select;
(2) each Non-Employee Director of the Company who
qualifies for automatic grants of Nonqualified Stock
Options pursuant to Section 6(a)(2) and Restricted
Stock pursuant to Section 6(d);
(b) Employees described in subsection (a) whose
remuneration is liable to income tax in the United Kingdom under
Schedule E (i.e., employees who are resident and ordinarily resident
in the United Kingdom and whose duties are performed there) shall also
be eligible to receive Awards pursuant to the United Kingdom Sub-Plan.
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5. PARTICIPATION.
The Committee shall select, from time to time, Grantees from
those persons eligible under Section 4 above who, in the opinion of the
Committee, further the Plan's purposes.
6. FORM OF AWARDS, AND TERMS AND CONDITIONS THEREOF.
The terms and conditions of the Awards granted under the Plan
shall be as set forth in the Award Notice and as follows:
(a) STOCK OPTIONS. Stock Options granted under the Plan
may, in the discretion of the Committee, be Incentive Stock Options,
Nonqualified Stock Options and Approved Stock Options. The terms and
conditions of Approved Stock Options are not set forth in the main
portion of this Plan but are instead set forth in Appendix A hereto.
(1) Amount of Award. The aggregate Fair Market Value
(determined at the time an Incentive Stock Option is
granted) of the stock with respect to which Incentive
Stock Options first become exercisable during any
calendar year under the terms of this Plan for any
Grantee may not exceed $100,000. For purposes of
this $100,000 limit, the Grantee's Incentive Stock
Options under this Plan and all plans maintained by
the Grantee's employer corporation and its parent and
subsidiary corporations shall be aggregated.
The total number of shares of Common Stock with
respect to which Nonqualified Stock Options or SARs
may be granted to any one individual under the Plan
through December 31, 1999 may equal but shall not
exceed ten percent (10%) of the aggregate number of
shares of Common Stock that may be issued under the
Plan.
(2) Automatic Grants to Non-Employee Directors. Each
Non-Employee Director will automatically
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receive a Nonqualified Stock Option to acquire 500
shares of Common Stock on the first business day of
1995 and of each calendar year thereafter during
which such Non-Employee Director shall serve on the
Company's Board of Directors.
(3) Exercise Price. The Exercise Price of any Stock
Option shall be the Fair Market Value of Common Stock
on the Grant Date; provided, however, that the
Exercise Price of any Incentive Stock Option granted
to any employee who on the Grant Date owns more than
10 percent of the total combined voting power of all
classes of stock of the Company shall not be less
than 110 percent of the Fair Market Value of such
shares on the Grant Date.
The Exercise Price shall be payable in United States
dollars in cash or by certified check, bank draft or
postal or express money order. The Committee may, at
the request of a Grantee
(A) accept payment of the Exercise Price from
residents of a foreign country in currency of
that country;
(B) arrange short-term outside financing for the
purpose of financing the Exercise Price of
the option;
(C) approve and comply with any procedures
necessary to allow a broker to sell and remit
to the Company the sale proceeds of the
portion of the shares to be acquired upon
exercise with a Fair Market Value equal to
the sum of the Exercise Price and any tax
withholding required; or
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(D) accept prior acquired shares of Common Stock
which have been held by the Grantee for at
least six (6) months in partial or full
payment of the Exercise Price. Common Stock
so accepted shall be valued at its Fair
Market Value on the date the Incentive Stock
Option or Nonqualified Stock Option is
exercised.
(4) Term of Stock Options and Timing of Exercise.
(A) In General. Each Stock Option granted under
the Plan shall be exercisable in whole or in
part at such time or times as the Committee
in its sole discretion may determine;
provided, however, that
(i) Nonqualified Stock Options issued to
Non-Employee Directors shall be first
exercisable six (6) months from the
Grant Date;
(ii) Incentive Stock Options granted to
an employee who, on the Grant Date,
owns more than 10 percent of the
combined voting power of all
classes, shall not be exercisable
after the expiration of five (5)
years from the Grant Date;
(iii) No Stock Option awarded to any
Grantee shall be exercisable after
the expiration of ten (10) years
from the Grant Date;
(iv) No Stock Option or SAR held by a
Grantee who is a Reporting Person
shall be exercisable during the
first six (6) months of its term.
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(B) Termination of Employment, Termination of
Board Service or Death. If a Grantee's
employment or membership on the Company's
Board of Directors terminates on account of
death, Disability or retirement, the Stock
Options otherwise exercisable by the Grantee
through the date of such termination may be
exercised within five years of such date;
provided, however, that no Stock Option may
be exercised after the expiration date
thereof. Any Stock Option exercisable after
death may be exercised by the decedent's
legal representatives.
In the event a Grantee's employment or
service on the Company's Board of Directors
shall terminate on account of resignation,
discharge not for cause or expiration of
elected term, the Stock Options otherwise
exercisable by the Grantee through the date
of such termination may be exercised by the
Grantee no later than three (3) months
following the date of such termination except
that in the case of employee Nonqualified
Stock Options, the Committee may, in its sole
discretion, provide for a later date;
provided, however, that no Stock Option may
be exercised after the expiration date
thereof.
If a Grantee's employment shall terminate on
account of discharge for cause, the Grantee
shall forfeit all outstanding Stock Options
as of the date of termination.
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To the extent not then exercisable in
accordance with this Section, unless the
Committee shall, in its discretion, determine
otherwise, the Stock Options of a Grantee who
resigns or whose employment terminates shall,
except as set forth in Section 8, terminate
on the date his employment terminates.
(5) Replacement Options. In the event a Grantee
exercises a Nonqualified Stock Option by using shares
of Common Stock, which the Grantee has owned for at
least six (6) months, in partial or full payment of
the Exercise Price, the Grantee shall automatically
be granted a new Nonqualified Stock Option to
purchase a number of shares of Common Stock equal to
the number of shares of Common Stock used in payment
of the Exercise Price (the "Replacement Option").
Replacement Options shall be granted with respect to
only the number of shares of Common Stock issuable
under the original Award.
Notwithstanding any provision of this Plan to the
contrary, (a) the Replacement Option shall become
first exercisable one year after the Grant Date
thereof provided that, as of that date, the Grantee
owns shares of Common Stock acquired as a result of
the exercise of the original Nonqualified Stock Option
equal to the excess of the shares received on exercise
of the original Nonqualified Stock Option less the sum
of the exercise price of the original Nonqualified
Stock Option plus any income tax due as a result of
the exercise of the original Nonqualified Stock
Option, and (b) the Replacement Option shall expire on
the same date that the original Nonqualified Stock
Option (with respect to which the Replacement Option
was granted)
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would have expired by its terms. All other provisions
of this Plan pertaining to Nonqualified Stock Options
shall apply to Replacement Options.
(b) STOCK APPRECIATION RIGHTS.
(1) In General. SARs may be granted by the Committee
with respect to any Stock Option granted pursuant to
the Plan. Such SARs shall be granted at the time of
the grant of the related Stock Option. Each such
related SAR shall be subject to the same terms and
conditions (and any such additional terms and
conditions as the Committee may deem appropriate) as
the Stock Option to which it relates. Upon the
exercise of all or a portion of a related SAR, all or
such portion of the Option related to the SAR which
has been exercised shall terminate. On the exercise
of all or a portion of a Stock Option which is
related to a SAR, all or such portion of the SAR
which is related to the Option which has been
exercised shall terminate.
(2) SARs Related to Incentive Stock Options. With
respect to SARs related to an Incentive Stock Option,
the following conditions shall apply to such related
SAR:
(A) The SAR shall expire no later than the
underlying Incentive Stock Option;
(B) The SAR shall be for no more than 100% of the
difference between the Exercise Price of the
underlying Incentive Stock Option and the
Fair Market Value of the stock subject to the
underlying Incentive Stock at the time the
SAR is exercised;
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(C) The SAR shall be transferable only when the
underlying Incentive Stock Option is
transferable, and under the same conditions;
(D) The SAR may be exercised only when the
underlying Incentive Stock Option is eligible
to be exercised and only when the Fair Market
Value of the stock subject to the underlying
Incentive Stock Option exceeds the Exercise
Price.
(3) Exercise of SARs. The Exercise Price of a SAR
related to an Option, regardless of when issued,
shall be the same as the Exercise Price of the
Incentive Stock Option or Nonqualified Stock Option
to which it relates.
Upon exercise of a SAR, unless subject to Section
6(b)(4), the Grantee shall be entitled to receive an
amount equal to the product of:
(x) the amount by which the Fair Market Value of
Common Stock on the date of exercise of the
SAR exceeds the Exercise Price per share
specified in the SAR, multiplied by
(y) the number of shares of Common Stock in
respect of which the SAR shall have been
exercised.
(4) Form and Time of Payment of Related SARs. The amount
to which a Grantee is entitled on exercise of a
related SAR may be satisfied in Common Stock, in cash
or in a combination of both, as determined by the
Committee, in its discretion. If the Committee
determines to satisfy all or part of the amount due
the Grantee in Common Stock, the number of shares
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of Common Stock to which the Grantee is entitled
shall be the largest whole number obtained by
dividing the dollar amount to be satisfied in Common
Stock pursuant to the exercise of the related SAR by
the Fair Market Value of Common Stock, on the date of
exercise. Fractional shares shall be distributed on
exercise of any related SAR in cash.
(c) ANNUAL INCENTIVE BONUSES AND LONG-TERM PERFORMANCE
BONUSES.
(1) Performance Objective. Prior to the commencement of
each Award Period (or during the first 90 days of
such Award Period to the extent permitted under
regulations issued by the U.S. Department of
Treasury under Section 162(m) of the Code), the
Committee shall determine, in writing, for each
Grantee or group of Grantees a "Performance
Objective" as determined under Section 6(c)(2).
Notwithstanding the foregoing, in the event of an
adjustment in the accounting standards applicable to
the Performance Objective, such Performance Objective
may be revised by the Committee in a manner
consistent with such adjustment. Also prior to the
commencement of an Award Period (or during the 90-day
period described above), the Committee shall
determine the distributable percentage to be applied
to the Bonus opportunity in the event the Performance
Objective for the Award Period is not fully achieved
or is exceeded. Notwithstanding the amount of any
Bonus granted hereunder, the Committee retains the
discretion to award a Bonus that is less than the
amount otherwise payable for the Award Period. The
Committee shall issue an Award Notice to each Grantee
which states his Performance Objective and Bonus
opportunity as soon as practicable after such grant.
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(2) Amount and Form of Bonus.
(A) Annual Incentive Bonus. The Committee shall
determine an annual Performance Objective for
the Company and its Subsidiaries for each
Award Period, shall select Grantees and shall
determine the percentage of the Grantee's
salary rate (as of the end of the fiscal year)
which would be paid to a Grantee as an Annual
Incentive Bonus based upon such criteria as
shall be determined by the Committee in its
sole discretion. Performance Objectives
applicable to an Annual Incentive Bonus may be
measured by the Company's statutory
underwriting combined ratio, a targeted
improvement in the Company's statutory
underwriting combined ratio, the Company's
statutory underwriting combined ratio relative
to the cumulative statutory underwriting
combined ratio of the companies reporting to
the Reinsurance Association of America
(excluding the General Re Group companies),
the total return on various company investment
portfolios and other measures the Committee
deems appropriate. To the extent such Annual
Incentive Bonus Award is made to a Grantee who
is a Reporting Person, no such Award may be
paid unless the Committee has certified, in
writing, that the Performance Objective for
the Award Period has been met. Subject to the
Committee's certification, the Committee shall
award an Annual Incentive Bonus to all
Grantees who are Reporting Persons not to
exceed, in the aggregate, 1% of the
consolidated net income of the Company and its
Subsidiaries; provided, however, that no such
Grantee may receive an Annual
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Incentive Award in excess of $1,500,000.
(B) Long-Term Performance Bonuses. The Committee
shall designate Award Periods of not less than
three nor more than five (5) consecutive
fiscal years, the first Award Period to
commence January 1, 1995, with respect to
which Long-Term Performance Bonuses shall be
awarded. The Performance Objective applicable
to a Long-Term Performance Bonus shall be
based on the relative total return to
stockholders over the Award Period. Such
Bonus shall be determined as a target
percentage of the Grantee's paid salary for
the final year of the Award Period, but in no
event may a Grantee receive a Long-Term
Performance Bonus in excess of $1,500,000.
Prior to the commencement of each Award Period
(or during the 90-day period described
above), the Committee shall determine, in
writing, for each Grantee or group of Grantees
a Performance Objective based on Relative
Total Return to Shareholders over the Award
Period and may range from 0-200% of the
Grantee's target. In the case of an Award
Period consisting of five (5) consecutive
fiscal years, during the first three (3) such
years the Committee may, in its discretion,
select additional employees who are not
Reporting Persons to receive a Long-Term
Performance Bonus, determine for each such
Grantee a Performance Objective based on his
entry into the Plan as of January 1 of the
year following his selection and the pro rata
amount of his Long-Term Performance Bonus
opportunity, and determine the distributable
percentage to be applied to the Long-Term
Performance Bonus opportunity in the event
the Performance Objective for
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the shorter Award Period is not achieved. The
Committee shall issue an Award Notice to each
Grantee which states his Performance Objective
and Long-Term Performance Bonus opportunity as
soon as practicable after such grant. To the
extent a Long-Term Performance Bonus Award is
made to a Grantee who is a Reporting Person,
no such Award may be paid unless the Committee
has certified, in writing, that the
Performance Objective for the Award Period has
been met.
(3) Crediting and Payment of Bonuses. The Committee shall
determine, in its sole discretion, to credit, award or
pay Annual Incentive Bonuses and Long-Term Performance
Bonuses in cash, Common Stock, Share Units or
Restricted Stock Options, or some combination thereof,
and may, in its sole discretion, offer a Grantee the
opportunity to defer the payment of some or all of his
Annual Incentive Bonus or Long-Term Performance Bonus
into Share Units and Restricted Stock Options,
provided that in the case where a Grantee is offered
the opportunity to defer the payment of a Bonus such
election must be made, in the case of the Annual
Incentive Bonus, before the beginning of the
applicable Award Period; and in the case of the
Long-Term Performance Bonus, before the beginning of
the last year in the Award Period. The terms and
conditions of a Restricted Stock Option will be the
same as those applicable to Stock Options under
Section 6(a) other than such restrictions as the
Committee, in its discretion, may approve.
(4) Termination of Employment. If a Grantee's employment
by the Company or a Subsidiary terminates for any of
the reasons stated below prior to the end of an Award
Period for which he was (a) eligible for an Annual
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Incentive Bonus, or (b) awarded a Long-Term
Performance Bonus opportunity, the amount of his Bonus
shall be determined as follows:
(A) If the Grantee retires under a Company or
Subsidiary pension plan, dies, is Disabled, or
his employment is involuntarily terminated not
for cause or in such other circumstances as
the Committee may in its sole discretion
determine, such Grantee shall receive the
proportion of his Bonus (upon determination by
the Committee of the degree of success in
achieving the Performance Objective) which the
number of full months of active service of the
Grantee during the Award Period bears to the
total number of months in such Award Period;
(B) If the Grantee resigns or is discharged
(whether or not for cause) he will forfeit his
Bonus, provided, however, that if said
Grantee's employment terminates during a
Long-Term Performance Bonus Award Period, such
Grantee shall receive whatever portion of his
Long-Term Performance Bonus as the Committee
in its sole discretion shall determine.
(d) RESTRICTED STOCK.
(1) Transfer of Restricted Stock. As soon as practicable
following the Grant Date, a certificate or
certificates for all shares of Restricted Stock
granted to a Grantee by the Committee shall be
registered in the name of the Grantee and held for the
Grantee by the Company. The Grantee shall thereupon
be a stockholder and have all the rights of a
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stockholder with respect to such shares, including the
right to vote and receive all dividends or other
distributions made or paid with respect to such
shares. As the restrictions are released, a
certificate (without the legend mentioned below) for
the number of shares with respect to which
restrictions have been released will be delivered to
the Grantee as soon as practicable.
Such Restricted Stock, and any new, additional or
different securities, cash or other property, the
Grantee may become entitled to receive with respect to
such Restricted Stock by virtue of the events
described in Section 8 shall be subject to the
restrictions described in Paragraph (3) below. In
order to enforce such restrictions, the Committee
shall cause a legend or legends to make specific
reference to such restrictions on all certificates for
Restricted Stock.
(2) Automatic Grants to Non-Employee Directors. Each
Non-Employee Director will automatically receive a
grant of 65 shares of Restricted Stock pursuant to
this Section 6(d) on the first business day following
the date the Plan is approved by the Company's
stockholders, and the first business day of each
calendar year thereafter during which such
Non-Employee Director shall serve on the Company's
Board of Directors. Notwithstanding any provision in
this Section 6(d) to the contrary, no shares of
Restricted Stock held by a Non-Employee Director may
be sold, exchanged, transferred, pledged, hypothecated
or otherwise disposed of by the Grantee until the
later of (i) the expiration of five (5) years from
the Grant Date or (ii) retirement from membership on
the Board of Directors of the Company pursuant to the
By-Laws of the Company.
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(3) Specific Restrictions and Release of Restrictions . In
addition to such other restrictions that the Committee
may deem advisable in its sole discretion, no shares
of Restricted Stock held by a Grantee may be sold,
exchanged, transferred, pledged, hypothecated, or
otherwise disposed of by the Grantee until their
release as provided below:
(A) Committee Discretionary Release. The above
restrictions on the shares of Restricted Stock
shall be released with respect to the
percentage of shares as of such date (or such
dates), as determined by the Committee in its
sole discretion;
(B) Disability or Retirement. In the event of the
Grantee's termination of employment with the
Company due to (i) Disability or (ii)
retirement on or after normal retirement date
under a Company or Subsidiary pension plan,
all restrictions on the shares of such
Restricted Stock held by the Grantee shall
lapse;
(C) Death. In the event of the Grantee's
termination of employment due to the Grantee's
death, all restrictions on the shares of such
Restricted Stock held by the Grantee shall
lapse and such shares shall be delivered to
the Grantee's beneficiary.
(D) Other Termination of Employment. In the event
of the Grantee's termination of employment
after the Grant Date for reasons other than
those stated in subparagraphs (B) and (C)
above and Section 9, the Grantee shall forfeit
all shares of Restricted Stock on which
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restrictions still apply; provided, however,
that the Committee may, at its sole
discretion, determine as to the Grantee the
degree to which restrictions on shares of such
Restricted Stock held by the Grantee shall
lapse.
(e) SHARE UNITS. The Committee shall award Share Units to
such Grantees, in such amounts, and subject to such vesting and/or
acceleration schedules as it shall determine from time to time. Share
Units shall vest at the time set forth in the Award Notice. Shares of
Common Stock shall in no event be delivered earlier than the fifth
anniversary of the Grant Date, nor later than the date of the Grantee's
death, Disability, retirement under a Company or Subsidiary pension
plan, a Change-in-Control, or as otherwise determined by the Committee
in its sole discretion. The value of a Share Unit at Grant Date shall
be determined by the Committee in its discretion by taking into account
the illiquidity of the Share Units, the five-year investment risk, the
absence of voting rights and the risk of forfeiture; provided, however,
that the value shall in no event be less than 75% of the Fair Market
Value of a share of Common Stock on the Grant Date. Additional Share
Units shall be credited to the Grantee's account to reflect cash
dividends, as determined by the Committee in its sole discretion. Any
new Share Units credited with respect to an original grant of Share
Units shall be treated as if credited as of such original Grant Date.
If during the time Share Units are outstanding a Grantee's employment
is terminated for cause or the Grantee engages in the unauthorized use
of proprietary information, both of which conditions shall be
determined by the Committee in its sole discretion, the Grantee shall
forfeit all Share Units credited to his account.
(1) Termination of Employment. In the event of the
Grantee's termination of employment with the Company
due to (i) Disability, (ii) retirement on or after the
Grantee's normal retirement date under a Company or
Subsidiary pension plan or (iii) death the Grantee's
Share Units shall immediately vest (to the extent not
otherwise vested) and become
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payable. In the event of the Grantee's termination of
employment after the Grant Date for reasons other than
those stated in this subparagraph and Section 9, the
Grantee shall forfeit all nonvested Share Units
provided, however, that the Committee may, at its sole
discretion, determine that, as to the Grantee, such
Share Units shall vest.
(2) Payment of Share Units. Share Units shall be payable
in shares of Common Stock. Any fractional share
shall be paid in cash based on the Fair Market Value
of a share of Common Stock on the appropriate
determination date.
7. STOCK SUBJECT TO THE PLAN.
The stock issuable under the Plan shall be shares of the
Company's authorized but unissued Common Stock or Common Stock held in the
Company's treasury. The total number of shares of Common Stock with respect to
which Awards (including Incentive and Approved Stock Options) may be granted
under the Plan may equal but shall not exceed in the aggregate 5.0 million
shares; provided, however, that from the aggregate limit, (a) the maximum number
of shares of Common Stock with respect to which Restricted Stock and Share Units
may be awarded under the Plan shall not exceed 500,000 shares unless such
Restricted Stock and Share Units are transferred in lieu of cash compensation,
(b) the maximum number of shares available for Stock Options and Restricted
Stock granted to Non-Employee Directors shall not exceed 60,000 shares, and (c)
the maximum number of shares available for Stock Options and SARs to an employee
shall not exceed ten (10) percent of the shares available under the Plan.
For purposes of determining the number of shares of Common
Stock remaining available under the Plan, the exercise of a SAR related to such
Option shall be equivalent to the exercise of the related Stock Option. Any
shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without issuance of shares, are settled in
cash in lieu of Common Stock, or are exchanged in the Committee's discretion for
Awards not involving Common Stock, shall be available again for grant under the
Plan to Grantees who are not Reporting Persons; provided, however, that only the
new number of
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shares of Common Stock actually issued shall be counted where shares of Common
Stock are tendered in payment of the Exercise Price. An outstanding related SAR
shall not be taken into account in determining the aggregate number of shares
with respect to which Stock Options may thereafter be granted.
(a) Additional Agreements. The Committee may, as a
condition precedent to the exercise of any Award, require the Grantee
thereof (or, in the event of the Grantee's death, his legal
representatives, legatees or distributees) to enter into such agreement
or to make such representations as may be required to make lawful the
transfer of shares of Common Stock to the Grantee upon exercise of a
Stock Option or otherwise and the ultimate disposition of the shares so
acquired.
8. RECAPITALIZATION, MERGER, CONSOLIDATION AND SIMILAR TRANSACTIONS.
Subject to any required action by stockholders, the aggregate
number of shares of Common Stock and Restricted Stock issuable under the Plan,
the Exercise Price of any Stock Option or SAR, and the number of Share Units
credited to a Grantee's Bonus account or otherwise granted shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend on Common Stock other than a stock dividend
that is a substitute for a cash dividend or any other increase in the number of
such shares effected without receipt of consideration by the Company; provided
that no such adjustment in Exercise Price may reduce the Exercise Price to an
amount per share which is less than the par value of such share.
Subject to any required action by stockholders, in the event of
the dissolution or liquidation of the Company, a merger or consolidation of the
Company, a merger or consolidation in which the Company is not the surviving
corporation, or a merger or consolidation in which the Company is the surviving
corporation but the holders of Common Stock receive securities of another
corporation
(a) any Award granted hereunder shall pertain to and
apply to the securities, cash or other property
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(subject to adjustment by cash payment in lieu of fractional interests)
to which a holder of the number of shares of Common Stock equal to the
number of shares the Grantee would have been entitled; and
(b) the Committee shall, in its discretion, have the
power, prior to such event, (i) to cancel any or all Awards which are
then exercisable and, in consideration of such cancellation, pay to
each Grantee an amount in cash with respect to each share of Common
Stock as to which an Award is then exercisable equal to the difference
between the value per share of the consideration, as determined by the
Committee in its discretion, received by holders of Common Stock as a
result of such dissolution, liquidation, merger or consolidation and
the Exercise Price, and to terminate without consideration all Awards
not then exercisable; or (ii) if the holders of Common Stock receive
property other than cash as a result of such dissolution, liquidation,
merger or consolidation, to provide for the exchange of an Award which
is then exercisable for a Stock Option or SAR on some or all of such
property and, incident thereto, make an equitable adjustment, as
determined by the Committee, in the Exercise Price of each affected
Award, the number of shares or other property subject to the Award and,
if appropriate, provide for a cash payment to the Grantees in partial
consideration for the exchange for their Award and to terminate without
consideration all Awards not then exercisable. The foregoing
adjustment shall be made by the Committee, whose determination in that
respect shall be final, binding and conclusive.
If changes in capitalization of the Company other than those
referred to above shall occur, the Committee may, but need not, make such
adjustments in the number and class of shares of Restricted Stock that may
thereafter be granted or in the number and class of shares of Restricted Stock
then outstanding as the Committee may consider appropriate to prevent dilution
or enlargement of rights.
Except as provided herein, the Grantee shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class, the
payment of any stock dividend or any
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other increase or decrease in the number of shares of stock of any class, any
dissolution, liquidation, merger, consolidation or change in control or any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class and no adjustment by reason thereof shall be
made with respect to the Exercise Price or number of shares of Common Stock
subject to an Award.
Notwithstanding anything to the contrary in the Plan, neither
the Board nor the Committee shall have any authority to take any action under
the Plan where such action would affect the Company's ability to account for any
business combination as a "pooling of interests."
9. CHANGE IN CONTROL.
Notwithstanding any other provision to the contrary, upon a
Change in Control
(a) all Stock Options shall become immediately and fully
exercisable;
(b) all Long-Term Performance Bonuses shall become
immediately payable or creditable, where applicable, based upon the
assumption that the Performance Objectives have been fully achieved or,
if greater, on actual performance achieved; but in no event for an
amount greater than the proportion of the Bonus which the number of
months served during the Award Period prior to such occurrence bears to
the total number of months in the Award Period, and all amounts
deferred pursuant to Section 6(c)(3), if any, shall be immediately
payable in a lump sum payment in cash;
(c) all Annual Incentive Bonuses shall become immediately
payable or creditable, where applicable, based upon the assumption that
the Performance Objectives have been fully achieved; but in no event
for an amount greater than the proportion of the Bonus which the number
of months served during the Award Period prior to such occurrence bears
to the total number of months in the Award Period, and all amounts
deferred pursuant to Section 6(c)(3), if any, shall be immediately
payable in a lump sum payment in cash;
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(d) Restricted Stock Options and Share Units credited
pursuant to Section 6(c)(3) shall become fully vested (to the extent
not otherwise vested) and payable;
(e) where the Grantee's employment with the Company
terminates (other than by reason of death, Disability, retirement on or
after normal retirement date under a Company or Subsidiary pension
plan, termination for cause or voluntary termination by the Grantee
except for good reason) within two years thereafter, all restrictions
on all shares of Restricted Stock (or cash, securities or other
property) and Share Units, granted pursuant to Section 6(e), held by
the Grantee under the Plan shall lapse. Notwithstanding the foregoing,
if a Change in Control occurs, the Committee may, at its sole
discretion, determine that all or some percentage of the restrictions
shall lapse as to the shares of such Restricted Stock and/or Share
Units held by the Grantee.
10. TERM OF PLAN.
The Plan shall become effective as of January 1, 1995, subject
to its approval by the Company's shareholders at the 1995 annual meeting. The
Plan shall remain in effect until December 31, 1999 or until the exercise,
expiration or termination or payment of all Stock Options, Approved Stock
Options, SARs, Long-Term Performance Bonuses and Share Units under the Plan,
whichever is later; provided that Awards shall not be granted under the Plan
after December 31, 1999.
11. NONTRANSFERABILITY OF AWARDS AND DESIGNATION OF BENEFICIARIES.
No Awards under the Plan shall be subject in any manner to
alienation, anticipation, sale, assignment, pledge, encumbrance or transfer,
other than by will or by the laws of descent or distribution or (except with
respect to Incentive Stock Options) pursuant to a qualified domestic relations
order as defined by Section 414(p) of the Code or Section 206(d) of the Employee
Retirement Income Security Act of 1974, as amended, by the Grantee and no other
persons shall otherwise acquire any rights therein. During the lifetime of a
Grantee, Stock Options and SARs shall be exercisable only by the Grantee and
shall not be assignable or transferable except as provided above.
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A Grantee may name one or more beneficiaries to receive any
payment of an Award to which the Grantee may be entitled under the Plan in the
event of the Grantee's death, on a form to be provided by the Committee. A
participant may change the Grantee's beneficiary designation from time to time
in the same manner. The last such designation received by the Committee shall
be controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Grantee's death, and in no event shall it be effective as of the date prior to
such receipt.
If no designated beneficiary is living on the date on which any
payment becomes payable to a participant's beneficiary, such payment will be
payable to the person or persons in the first of the following classes of
successive preference:
(a) widow or widower, if then living,
(b) surviving children, equally,
(c) surviving parents, equally,
(d) surviving brothers and sisters, equally,
(e) executors and administrators,
and the term "beneficiary" as used in the Plan shall include such person or
persons.
12. REPORTING PERSONS.
With respect to all Awards granted to Reporting Persons, the
Award Notice shall provide that:
(a) Awards requiring exercise shall not be exercisable
until at least six months after the Grant Date of the Award, except in
the case of the death or Disability of the Grantee; and
(b) Shares of Common Stock issued pursuant to any Award
may not be sold by the Grantee for at least six months after
acquisition, except in the case of the death or Disability of the
Grantee; provided, however, that (unless an Award Notice provides
otherwise) the limitation of this Section 12 shall apply only if or to
the extent required by Rule 16b-3 under the Exchange Act. Award Notices
for Awards to Reporting Persons
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shall also comply with any future restrictions imposed by such Rule
16b-3.
3. WITHHOLDING OF TAXES.
No Stock Option may be exercised (A) during the period
beginning on the third business day following the date of release for
publication of the quarterly or annual summary statements of the earnings of the
Company and ending on the twelfth business day following such date, (B) six
months before the Award becomes taxable or (C) during any other period in which
a Withholding Election may be made under the provisions of Rule 16b-3
promulgated pursuant to the Exchange Act. Any fractional share of Common Stock
required to satisfy such tax obligations shall be disregarded and the amount due
shall be paid in cash by the Grantee.
4. AMENDMENT OF THE PLAN.
The Board of Directors or the Committee or its delegate, may
from time to time and in the event of a Change in Control suspend or discontinue
the Plan or revise or end it in any respect whatsoever except that, without
approval of the Company's stockholders, no such revision or amendment shall
increase the number of shares subject to the Plan, decrease the price at which
Stock Options or SARs may be granted, increase the amount to be received on
exercise of an SAR or Stock Option, materially increase the benefits accruing to
Grantees under the Plan, or materially modify the requirements as to eligibility
for participation in the Plan; and no such suspension, discontinuance, revision
or amendment shall in any manner affect any Stock Option or SAR theretofore
granted without the consent of the Grantee or the transferee of the Stock Option
or SAR.
15. APPLICATION OF FUNDS.
Any cash proceeds received by the Company from the issuance of
Common Stock pursuant to exercised Options will be used for general corporate
purposes.
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16. NO RIGHT TO CONTINUED EMPLOYMENT OR AWARDS.
Eligibility for, or participation in, the Plan shall not give
any employee any right to remain in the employ of the Company or any Subsidiary.
Further, the adoption of this Plan shall not be deemed to give any person any
right to be selected as a Grantee or to be granted an Award.
17. NO OBLIGATION TO EXERCISE OPTIONS OR SARs.
The granting of a Stock Option or SAR shall impose no
obligation upon the Grantee to exercise such Option or SAR.
18. RIGHTS OF A STOCKHOLDER; STATUS AS A GENERAL CREDITOR.
Unless and until such time as Common Stock is deliverable to
the Grantee under the terms of the Plan, a Grantee or a transferee shall have no
rights as a stockholder with respect to any shares covered by his or her Award;
but only a general creditor of the Company. Except as herein provided, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or any other distributions for which the
record date is prior to the date as of which such stock is issued.
19. INDEMNIFICATION OF COMMITTEE.
The Company shall indemnify, to the full extent permitted by
law, each person made or threatened to be made a party to any civil or criminal
action or proceeding by reason of the fact that he, or his testator or
intestate, is or was a member of the Committee.
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20. COMPLIANCE WITH CERTAIN LAWS.
(a) The Company intends that issuances and exercise of Stock
Options and SARs under the Plan to persons subject to Section 16(b) of
the Exchange Act comply with the requirements of Rule 16b-3 under the
Exchange Act during the term of the Plan, that issuances and exercises
of Incentive Stock Options comply with Section 422 of the Code, and
that Awards comply with Section 162(m) of the Code. Should any
provision of the Plan not be necessary to comply so with the
requirements of Rule 16b-3, Section 422 or Section 162(m) or should any
additional provision be necessary for the Plan and grants and exercises
thereunder to so comply, the Board of Directors of the Company or
Committee may amend the Plan to add or modify provisions of the Plan
accordingly.
(b) Should any option or portion thereof designated or
granted by the Committee as an Incentive Stock Option fail to meet the
requirements of Section 422, for any reason whatsoever upon the
issuance, exercise, sale of shares received on the exercise or
otherwise, then, in such event, the Grantee shall be deemed for all
purposes of this Plan to have been granted a Nonqualified Stock Option
covering the same number of shares, at the same price, with the same
duration and exercisable on the same terms as the Incentive Stock
Option or portion thereof which failed to meet the requirements of
Section 422.
(c) Notwithstanding anything contained in the Plan to the
contrary, the Company shall have no obligation to issue or deliver
shares of Common Stock in respect of any Award prior to (1) the
approval of the Plan by a majority of the stockholders of the Company
voting, in person or by proxy, at the 1995 Annual Meeting of
Shareholders, (2) the obtaining of any approval or the satisfaction of
any waiting period or other condition any governmental agency which the
Committee shall, in its sole discretion, determine to be necessary or
advisable, (3) the admission of such shares to listing on the stock
exchange on which Common Stock may be listed, and (4) the completion of
any registration or other qualification of said shares under any state
or federal law or ruling or any governmental body which the Committee
shall, in its sole discretion, determine to be necessary or advisable.
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21. GOVERNING LAW.
The Plan shall be governed by the internal laws of the State of
New York (and not its choice of law provisions) to the extent not superseded by
applicable Federal law.
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Appendix A
GENERAL RE CORPORATION
1995 LONG TERM COMPENSATION PLAN
UK APPROVED STOCK OPTION PLAN
SPECIAL ADDENDUM FOR THE UK STOCK OPTION PLAN
This Addendum is supplemental to the 1995 Long-Term Compensation Plan
of General Re Corporation dated January 1, 1995, and all or any variations or
amendments thereto (hereinafter together referred to as "the Main Plan") and
shall apply for the purposes of granting Options to any Employee (as hereinafter
defined) whose remuneration is liable to income tax under Schedule E in the
United Kingdom. This Addendum shall apply in relation to all Options granted or
to be granted to any such Employee, other than options specifically designated
as not being granted under this Addendum. For the purposes of this Addendum,
words and phrases herein mentioned shall have the meanings ascribed to them in
Section 11 hereof.
1. Purpose
The Purpose of the U.K. Plan ("this Plan") is to provide a means by
which certain directors, officers and employees of General Re Europe Limited or
General Re Financial Securities, Limited (individually or collectively, the "UK
Companies"), each a United Kingdom company, and their Subsidiaries may be given
an Option to purchase Common Stock of General Re Corporation, a Delaware, U.S.A.
corporation ("the Company"), under a Plan approved by the Board of Inland
Revenue under ICTA 1988 Schedule 9. This Plan is intended to advance the
interests of the UK Companies and their Subsidiaries (hereinafter collectively
referred to as "the Group") by encouraging stock ownership on the part of
certain directors, officers and employees of companies within the Group
("Employees") by enabling the Group to secure and retain the services of such
Employees, and by providing such individuals with an additional incentive to
advance the success of the Group. This Plan shall be available for the grant of
Options to different Employees and groups of Employees and in different
jurisdictions in such amounts to such Employees and on such terms as the
Committee (as hereafter defined) shall in their absolute discretion at any time
and from time to time determine this Plan in any way that they think fit
35
to provide benefits to Employees in any way and to comply with the local tax
laws of any jurisdiction; provided that any such variation shall not extend the
terms of this Plan or the number of shares over which Options may be granted or
otherwise in the opinion of the Committee (whose decision thereupon shall be
conclusive) go outside the bounds, limits, and intent of this Plan.
The Committee may set out such varied Plan in an addendum to the Main
Plan or in any separate document or set of documents and such plan shall have
effect provided that it is expressed to be supplemental to the Main Plan.
2. Shares Subject to Option
Subject to adjustment as provided in Section 4 hereof and to the
provisions of ICTA 1988, Options may be granted pursuant to the Main Plan
(including grants pursuant to this Plan) by the Company from time to time to
purchase up to an aggregate of 5.0 million shares of its Common Stock. Common
Stock that is no longer subject to purchase pursuant to an Option granted under
the Main Plan or this Plan, by reason of the expiration of an Option or
otherwise, may be re-optioned under the Main Plan or this Plan. The Company
shall not be required upon the exercise of any Option, to issue or deliver any
Common Stock prior to the completion of such registration or other qualification
of such Common Stock under any national, state or federal law, rule or
regulation as the Compensation Committee shall determine to be necessary or
desirable.
In the event of any recapitalization, merger, consolidation or similar
transaction, where possible, the number of shares of Common Stock shall be
adjusted in accordance with the provisions of Section 8 of the Main Plan;
provided, however, that they shall first obtain the agreement of the Board of
the Inland Revenue in writing and that the Auditors shall have confirmed in
writing that in their opinion such adjustment is fair and reasonable and that
any Option so adjusted is capable of being exercised after such adjustment as
well as prior to such adjustment in respect of the same proportion of the equity
capital of the Company and provided that no such adjustment shall result in the
issue of Common Stock in consequence of the exercise of an Option at a price per
share which is less than the nominal value thereof. Notice of any such
adjustment shall be
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given to the Optionee by the Compensation Committee, who may call in Option
Certificates for endorsement.
Provided that in the period of 10 years commencing at the Adoption Date
or such shorter period as shall be determined by the Main Plan, the aggregate
number of shares of Common Stock over which Options may be granted under the
Main Plan (including grants under this Plan) or the Company or any other plan
that is adopted by the Company shall not exceed 10 percent of the total ordinary
share capital of the Company in issue at the Date of Grant.
3. Participants
Persons eligible to be granted Options under this Plan shall be limited
to such Employees selected by the Committee, provided, however, that no Offer of
an Option shall be made to any Employee if the Date of Grant is less than 2
years before the normal retirement date under the contract of employment by
virtue of which he is eligible to participate in this Plan. Participation in
this Plan by an Employee is a matter entirely separate from any pension right or
entitlement he may have and from his terms or conditions of employment and
participation in this Plan shall in no respects whatever affect in any way an
Employee's pension rights or entitlement or terms or conditions of employment
and in particular (but without limiting the generality of the foregoing words)
no Employee who ceases to be a director, officer, employee of the Group shall be
entitled to any compensation for any loss of any right or benefit or prospective
right or benefit under this Plan, which he might otherwise have enjoyed whether
such compensation is claimed by way of damages for wrongful dismissal or other
breach of contract or by way of compensation for loss of office or otherwise
howsoever and notwithstanding that he may have been dismissed wrongfully or
unfairly within the meaning of the Employment Protection (Consolidation) Act
1978.
If there shall be application for Options for more shares of Common
Stock than are available under the Main Plan or any segmented part thereof or
than the Committee shall have decided to grant at any point in time, the
Committee shall scale down the applications or select amongst the applicants as
they shall in their absolute discretion think fit to ensure that no such limit
shall be exceeded.
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4. Terms and Conditions of Options
Options granted pursuant to this Plan shall be evidenced by agreements
in such forms, not inconsistent with this Plan, as the Committee shall from time
to time approve, and shall contain such terms and conditions as the Committee in
its sole discretion shall determine (including, but not limited to, provisions
as to the Option Price, Option Term, sequence to exercise, manner of exercise,
assignability, and provision for death, disability, and termination of
employment, provided that any conditions relating to a performance target to be
satisfied prior to the exercise of an Option shall require the prior approval of
the Inland Revenue) and the following provisions shall apply:
(a) Option Price and Material Interests
The Option Price shall be determined on grant by the Committee and
shall be not less than the greater of (i) Fair Market Value and (ii) the nominal
value of a share of Common Stock on the Grant Date.
(b) Term of Option
Each Option under this Plan shall expire one day prior to the end of
ten years from the date the Option is granted or the date the Plan is
terminated, except that under the circumstances described in Section 4(e),
Options may expire and terminate at an earlier date.
Except as otherwise provided in this Plan, each Option shall be
exercisable at any time or from time after the third anniversary of the Date of
Grant and prior to termination of the Option unless the Committee shall in their
absolute discretion waive this condition.
(c) Time of Granting Options
The Grant of an Option shall occur only if, within 30 days of the Date
of Grant, an Option Certificate, together with a cheque for such sum (not
exceeding US $1 or its equivalent in any other currency) as the Committee may
prescribe made payable to the Company in consideration of the grant of the
Option, shall
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have been duly executed and delivered by or on behalf of the company and the
Employee to whom such Option shall be granted. Options may be granted at any
time hereunder provided that no Option shall be granted hereunder which grant
would result or be likely to result in a breach by the Committee or the
Directors or any of them of any provision of (if relevant) the Listing Rules of
the London Stock Exchange.
(d) Limitation on Amount of Option
No Option shall be granted to an Employee if immediately following such
grant he would hold Subsisting Options over Common Stock with an aggregate
Subscription Price exceeding the greater of Pound Sterling 100,000 or four times
the amount of the Employee's Relevant Emoluments for the current or preceding
year of assessment (whichever of those years gives the greater amount) or, if
there were no Relevant Emoluments for the preceding Year of Assessment, four
times the amount of the Relevant Emoluments for the period of twelve months
beginning with the first day during the current Year of Assessment in respect of
which there are Relevant Emoluments.
For the purposes of this Section, Options shall include all options
granted under this Plan and all options granted under any other plan approved
under Schedule 9 and established by the Company or any member of the Group.
For the purpose of calculating the limits on aggregate Subscription
Price specified in Section 4(d) hereof, the Option Price of each Option
expressed in US dollars shall be converted into pounds sterling at the middle
spot rate of exchange quoted in New York by any recognized bank, selected by the
Committee, at the close of business on the Date of Grant of each such Option
granted to an Employee, and the sum of such sterling amounts shall be aggregated
to give the aggregate sterling Option Price.
(e) Death or Cessation of Employment of Optionee
(i) If an Optionee dies, his legal personal
representatives may exercise the Option within but not later than 12
months after the date of his death. To the extent that any Option so
exercisable is not exercised within such period it shall forthwith
cease and determine.
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(ii) If an Optionee ceases to be an Employee by reason of
injury, sickness, disability (evidenced to the satisfaction of the
Committee) or redundancy within the meaning of the Employment
Protection (Consolidation) Act 1978, he may exercise all or any of his
Options within the later of the periods of:
(A) 12 months from such cessation; or
(B) 42 months from the Date of Grant.
To the extent that any Option so exercisable is not exercised within
such period it shall forthwith cease and determine.
(iii) If an Optionee ceases to be an Employee due to
retirement at retirement age under his contract of employment he shall
be entitled to (or where he retires before reaching the retirement age
under his contract of employment, he may at the absolute discretion of
the Committee) exercise all or any of his Options within the later of
the period of:
(A) 12 months from such cessation; or
(B) 42 months from the Date of Grant.
To the extent that any Option so exercisable is not exercised within
such period it shall forthwith cease and determine.
(iv) If an Optionee ceases to be an Employee for any reason
other than as set out in Section 4(e)(i),(ii), and (iii), he may
exercise all or any of his Options only at the absolute discretion of
the Committee and where such exercise is permitted it shall be within
such period as may be specified by the Committee.
(f) Acceleration of Options Upon Change of Control
If a Change in Control (as defined in Section 2(d) of the Main Plan)
occurs, all Options shall become immediately exercisable.
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(g) Technical Loss of Employment
If an Optionee ceases to be an Employee by reason only that his office
or employment either is with a company which ceases to be Affiliate or relates
to a business or part of a business which is transferred to a person who is
neither an Affiliate nor an associated company of the Company he may exercise
any Option in whole or in part within three (3) months of his so ceasing
(subject always to any other applicable overall period for exercise of the
Option). To the extent that any Option so exercisable is not exercised within
such period, it shall cease and determine.
(h) Assignment
No Option nor any right thereunder shall be capable of being
transferred, assigned, charged or otherwise alienated, save that on the death of
an Optionee, an Option may pass to his personal representative.
(i) Exercise of Options
(i) Options may be exercised in whole or in part.
(ii) In order to exercise an Option in whole or in part,
the Optionee (or as the case may be, his personal representative(s))
must deliver to the Committee a notice in writing specifying the number
of shares of Common Stock in respect of which the Option is being
exercised accompanied by payment in full, in cash, for the Common Stock
in respect of which the Option is exercised. Such notice shall take
effect on the day it is delivered and such day shall constitute, for
all purposes, the date of exercise of such Option. Such notice shall be
given only in such form as the Committee may from time to time
prescribe. In the event of an Option being exercised in part only, the
balance of the Option not thereby exercised shall continue to be
exercisable in accordance with this Section 4 and the provisions of
this rule until such time as it shall lapse in accordance with and
subject to the rules of this Plan. The Option Certificate shall also
be lodged with the Committee on the exercise of any Option or any part
thereof.
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(iii) As soon as practicable and in any event not less than
thirty days after receipt by the Committee of such notice, Option
Certificate and payment, Common Stock in respect of which the Option
has been exercised shall be issued by the Committee upon definitive
Stock Certificates. If, under the terms of a resolution passed or an
announcement made by the Company prior to the date of exercise of an
Option, a dividend is to be paid or is proposed to be paid to the
holders of the Common Stock on the register of members in respect of a
record date prior to such date of exercise, the Common Stock to be
allotted upon such exercise will not rank for such dividend. Subject
as aforesaid the Common Stock so to be allotted shall be identical and
rank pari passu in all respects with the fully paid Common Stock of the
same class in issue on the date of such exercise.
(iv) No Option may be exercised by an individual at any
time when he is precluded by paragraph 8 of Schedule 9 from
participating in this Plan.
5. Administration
(a) This Plan shall be administered by the Committee in accordance
with the terms of the Main Plan.
(b) Subject to the provisions of this Plan, the Committee shall
have full power to grant Options under this Plan, to construe or interpret this
Plan, to prescribe, amend and rescind rules and regulations relating to it and
to make all other determinations necessary or advisable for its administration.
Provided that no such construction, interpretation, prescription, amendment,
recision, or determination shall either reduce the value of any Option or shares
of Common Stock purchased pursuant to such an Option or take effect if such
action would result in the loss, cancellation, or withdrawal of any relief or
exemption from taxation previously applicable thereto.
(c) Subject to the provisions of Sections 3 and 4 hereof, the
Committee may, from time to time, determine which Employees shall be granted
Options under this Plan, the number of shares of Common Stock subject to each
Option, and the time or
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times at which Options shall be granted or exercised, and to grant such Options
under this Plan.
(d) No member of the Board of Directors or of the Committee shall
be liable for any action or determination made in good faith with respect to
this Plan or to any Option and service on the Committee shall constitute service
as a director, entitling such Committee member to indemnification and
reimbursement for such service to the same extent as for service rendered as a
director.
(e) All allotments and issues of Common Stock shall be subject to
any necessary consents of HM Treasury or other authorities in the United States,
the United Kingdom or elsewhere under enactments or regulations for the time
being in force and it shall be the responsibility and at the expense of the
Company to comply with any requirements to be fulfilled in order to obtain or
obviate the necessity for any such consent.
(f) The Company shall at all times keep available for allotment
authorized and unissued or treasury Common Stock of the Company at least
sufficient to satisfy all subsisting Options.
(g) Any notice or other document required to be given hereunder to
any Optionee shall be delivered to him or sent by post to him at his home
address according to the records of the Company or such other address as may
appear to the Company to be appropriate. Any notice or other document required
to be given to the Company shall be delivered or sent by post to the relevant
registered office or offices. Notices sent by post shall be deemed to have been
given on the day but one following the date of posting.
(h) Optionees not otherwise entitled thereto shall be sent copies
of all notices and other documents sent by the Company to its ordinary
shareholders generally.
(i) The decision of the Compensation Committee in any dispute or
question relating to any Option shall be final and conclusive subject to the
terms of this Plan.
6. Adoption Date and Termination
(a) The Adoption Date of this Plan is January 1, 1995.
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(b) This Plan shall terminate on December 31, 1999, but the
Committee may terminate this Plan at any time prior to ten years from the
Adoption Date of this Plan. Termination of this Plan shall not alter or
impair, without the consent of the Optionee, any of the rights or obligations
and any Option theretofore granted under this Plan.
7. Use of Proceeds
The proceeds from the sale of shares of Common Stock pursuant to the
exercise of the Options will be used for the Company's general corporate
purpose.
8. Amendments
(1) The Committee may, with the prior written approval of the Board
of Inland Revenue, from time to time, alter, amend, suspend, or discontinue
this Plan, or alter or amend any and all Option agreements granted
thereunder; provided, however, that no such action of the Compensation
Committee may alter the provisions of this Plan so as to:
(a) Decrease the minimum Option Price;
(b) Extend the term of this Plan beyond five years or the maximum
term of the Options granted beyond ten years;
(c) Withdraw the administration of the Plan from the Compensation
Committee;
(d) Permit any member of the Compensation Committee to be eligible
to receive or hold an Option under this Plan;
(e) Alter any outstanding Option Agreement to the detriment of the
Optionee without his consent;
(f) Decrease, directly or indirectly (by cancellation and
substitution of Options or otherwise), the Option Price applicable to any
Option granted under this Plan.
(2) (a) Notwithstanding the provisions of this Section 8(2), the
Compensation Committee may at any time make such alterations (including
additions) to this Plan as
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are necessary to secure that this Plan receives initial approval from the
Board of Inland Revenue under Schedule 9.
(b) Subject to Section 8(2)(d) the Directors may, from time to
time at their absolute discretion, amend, waive, or replace any of the
provisions of this Plan provided that, except with the prior approval of the
Company's shareholders,
(i) no amendment, waiver, or replacement to the
advantage of Optionees shall be made to Sections 1 and 2 or this
Section 8(2)(b) or 8(2)(d) of the Plan or to the definitions of
Employee, Common Stock, Option Price, Date of Grant, Market Value or
Relevant Emoluments; and
(ii) the effect of Sections 3, 4 and 5 of this Plan
shall not be altered.
(c) No amendment, waiver, or replacement to this Plan shall be
made which would have the effect of abrogating or altering adversely any of
the subsisting rights of Optionees except with consent on their part.
(d) No amendment to this Plan shall be made without the prior
approval of the Board of Inland Revenue in writing.
(e) Written notice of any amendment made or to be made in
accordance with this Section 8 shall be given to all Optionees.
9. Governing Law
This Plan shall (notwithstanding the law applicable to any other
contract with an Employee) be construed according to the laws of England.
10. Inland Revenue Requirements
The Company shall provide to the Inland Revenue, within such time
as the Inland Revenue may direct, information requested by the Inland Revenue
under paragraph 6 of Schedule 9 and an Optionee shall:
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(i) provide to the Company in timely fashion such
information as the Company shall reasonably request; and
(ii) consent to the Company providing information
concerning him to the Inland Revenue,
for the purpose of complying with such a request from the Inland Revenue.
11. Definitions
For the purpose of interpreting and construing this Plan (except where
the context otherwise requires), the following expressions shall have the
meaning ascribed to them as set out below:
"Adoption Date" - The date on which the U.K. Plan is approved by the
resolution of the shareholders of the Company;
"Auditors" - The Auditors for the time being of the Company;
"The Committee" - The Compensation Committee of the Board of Directors
of the Company as described in Section 3(a) of the Main Plan;
"Date of Grant" - The date on which the Committee resolves to grant an
Option;
"The Directors" - The Board of Directors of the Company or a duly
authorized committee thereof;
"Employee" - An employee (other than a director) of a company which is
a member of the Group whose hours of work for such member of the Group exceeds
20 hours per week or a full time director of a company which is a member of the
Group whose hours of work for such member of the Group exceed 25 hours per week
in both cases exclusive of meal breaks, and is not precluded by paragraph 8 of
Schedule 9 from participating in this Plan;
"Fair Market Value" - The Market Value of a share of Common Stock
subject to the Option Agreement on the dated Grant
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or such earlier date or dates as may be agreed in writing with the Board of
Inland Revenue of the United Kingdom;
"The Group" - General Reinsurance Limited or any Affiliate for the time
being designated by the Committee as a member of the Group for the purposes of
this Plan or, where the context so permits, any one or more of them;
"ICTA 1988" - The Income and Corporation Taxes Act 1988 of the United
Kingdom;
"Market Value" - On any day the market value of a share of Common Stock
determined in accordance with the provisions of Part VIII of the Taxation of
Chargeable Gains Act 1992 of the United Kingdom and as agreed with the Board of
Inland Revenue on or before that day;
"Option" - A right to subscribe for Common Stock at the Option Price
granted to an Employee under the provisions of this Plan and for the time being
subsisting;
"Optionee" - Any person who holds an Option or (where the context
admits) his legal personal representatives;
"Option Certificate" - A certificate issued to an Optionee in
accordance with Section 4;
"Option Price" - The price per share of common stock of General Re
Corporation, par value $.50 per share which satisfies the conditions specified
in paragraphs 10-14 inclusive of Schedule 9;
"This Plan" - The Main Plan as varied by this Addendum;
"Relevant Emoluments" - Emoluments of an Employee of the office or
employment by virtue of which he is eligible to participate in the U.K. Plan as
are liable to be paid under deduction of tax pursuant to Section 203 of ICTA
1988 after deducting therefrom amounts included by virtue of Chapter ii of Part
V of the ICTA 1988;
"Schedule 9" - Schedule 9 to the ICTA 1988;
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"Subscription Price" - The amount payable in relation to the exercise
of an Option, being the amount after any adjustment pursuant to Section 2 of the
relevant Option Price multiplied by the number of Shares of Common Stock in
respect of which the Option is exercised;
"Subsidiaries" - Any subsidiary corporation of General Re Europe
Limited or General Re Financial Securities, Limited, within the meaning of
Section 736 of the Companies Act of 1985 of the United Kingdom;
"Subsisting Option" - An Option which has neither lapsed nor been
exercised.
"UK Companies" means General Re Europe Limited and/or General Re
Financial Securities, Limited.
"Year of Assessment" - a fiscal year from April 6th to April 5th.
For the purposes of this Plan:
(a) where words denote the masculine gender they shall for
the purposes of interpretation include the feminine and neuter genders and
vice versa;
(b) where words denote the singular they shall for the
purposes of interpretation include the plural and vice versa;
(c) unless the context otherwise requires words have the same
meanings as in Schedule 9 of Sections 185 and 187 of ICTA 1988;
(d) when referring to any enactment be construed as a
reference to that enactment as for the tune being amended or re-enacted;
(e) when referring to Sections throughout this Plan be taken
to refer to the Sections of this Plan.
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TABLE OF CONTENTS
Page
----
1. PURPOSE................................................ 1
2. DEFINITIONS............................................ 1
(a) "AWARD"............................................ 2
(b) "AWARD NOTICE"..................................... 2
(c) "AWARD PERIOD"..................................... 2
(d) "CHANGE IN CONTROL"................................ 2
(e) "CODE"............................................. 2
(f) "COMMITTEE"........................................ 2
(g) "COMMON STOCK"..................................... 2
(h) "DISABLED" or "DISABILITY"......................... 3
(i) "EXCHANGE ACT"..................................... 3
(j) "EXERCISE PRICE"................................... 3
(k) "FAIR MARKET VALUE"................................ 3
(l) "GRANT DATE"....................................... 3
(m) "GRANTEE".......................................... 3
(n) "INCENTIVE STOCK OPTION"........................... 3
(o) "NON-EMPLOYEE DIRECTOR"............................ 3
(p) "NON-QUALIFIED STOCK OPTION"....................... 3
(q) "PARENTAL LEAVE OF ABSENCE"........................ 3
(r) "RELATIVE TOTAL RETURN TO SHAREHOLDERS"............ 4
(s) "REPORTING PERSON"................................. 4
(t) "SHARE UNIT"....................................... 4
(u) "RESTRICTED STOCK OPTION".......................... 4
(v) "SUBSIDIARY"....................................... 4
(w) "TERMINATION OF EMPLOYMENT"........................ 4
(x) "UNITED KINGDOM SUB-PLAN".......................... 5
3. ADMINISTRATION.......................................... 6
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(a) THE COMMITTEE........................................ 6
(b) AUTHORITY OF THE COMMITTEE........................... 6
4. ELIGIBILITY............................................... 7
5. PARTICIPATION............................................. 8
6. FORM OF AWARDS, AND TERMS AND CONDITIONS THEREOF.......... 8
(a) STOCK OPTIONS........................................ 8
(1) Amount of Award............................... 8
(2) Automatic Grants to Non-Employee Directors.... 8
(3) Exercise Price................................ 9
(4) Term of Stock Options and Timing of Exercise.. 10
(A) In General.................................... 10
(B) Termination of Employment, Termination of
Board Service or Death........................ 11
(5) Replacement Options........................... 12
(b) STOCK APPRECIATION RIGHTS............................ 13
(1) In General.................................... 13
(2) SARs Related to Incentive Stock Options....... 13
(3) Exercise of SARs.............................. 14
(4) Form and Time of Payment of Related SARs...... 14
(c) ANNUAL INCENTIVE BONUSES AND LONG-TERM PERFORMANCE
BONUSES.............................................. 15
(1) Performance Objective......................... 15
(2) Amount and Form of Bonus...................... 16
(A) Annual Incentive Bonus................. 16
(B) Long-Term Performance Bonuses.......... 17
(3) Crediting and Payment of Bonuses.............. 18
(4) Termination of Employment..................... 18
(d) RESTRICTED STOCK..................................... 19
(1) Transfer of Restricted Stock.................. 19
(2) Automatic Grants to Non-Employee Directors.... 20
(3) Specific Restrictions and Release of
Restrictions.................................. 21
(A) Committee Discretionary Release........ 21
(B) Disability or Retirement............... 21
(C) Death.................................. 21
(D) Other Termination of Employment........ 21
(e) SHARE UNITS......................................... 22
(1) Termination of Employment.................... 22
(2) Payment of Share Units....................... 23
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7. STOCK SUBJECT TO THE PLAN................................... 23
(a) Additional Agreements.................................. 24
8. RECAPITALIZATION, MERGER, CONSOLIDATION AND SIMILAR
TRANSACTIONS................................................ 24
9. CHANGE IN CONTROL........................................... 26
10. TERM OF PLAN................................................ 27
11. NONTRANSFERABILITY OF AWARDS AND DESIGNATION OF
BENEFICIARIES............................................... 27
12. REPORTING PERSONS........................................... 28
13. WITHHOLDING OF TAXES........................................ 29
14. AMENDMENT OF THE PLAN....................................... 29
15. APPLICATION OF FUNDS........................................ 29
16. NO RIGHT TO CONTINUED EMPLOYMENT OR AWARDS.................. 30
17. NO OBLIGATION TO EXERCISE OPTIONS OR SARs................... 30
18. RIGHTS OF A STOCKHOLDER; STATUS AS A GENERAL CREDITOR....... 30
19. INDEMNIFICATION OF COMMITTEE................................ 30
20. COMPLIANCE WITH CERTAIN LAWS................................ 31
21. GOVERNING LAW............................................... 32
APPENDIX A SPECIAL ADDENDUM FOR THE UK STOCK OPTION PLAN.......... 34
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