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EXHIBIT 10.8
Amended 08/12/97
as of 01/01/97
W.R. BERKLEY CORPORATION
LONG-TERM INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of the Long-Term Incentive Compensation Plan (the "Plan") is to
promote the interests of W.R. Berkley Corporation (the "Company") and its
stockholders by (i) helping the Company to attract and retain outstanding
management, (ii) stimulating management's efforts on behalf of the Company by
giving participants a direct interest in the performance of the Company and
(iii) suitably rewarding participants' contributions to the success of the
Company.
The Company intends that compensation payable under the Plan will qualify for
deduction under Section 162(m) of the Internal Revenue Code of 1986, as amended.
ARTICLE II
DEFINITIONS
2.1 Award Certificate: A written instrument evidencing the award of
Units to a Participant.
2.2 Base Year EPS: Earnings Per Share for the Fiscal Year ended
December 31, 1996, which is $3.84, or, for Units awarded as of any date
subsequent to the Effective Date, Earnings Per Share for the Fiscal Year
immediately preceding such date.
2.3 Beneficiary: The person or persons designated by a Participant, in
accordance with Section 9.1, to receive any amount payable under the Plan upon
the Participant's death.
2.4 Board: The Board of Directors of the Company.
2.5 Code: The Internal Revenue Code of 1986, as amended from time to
time.
2.6 Committee: The Compensation and Stock Option Committee of the
Board, which is comprised solely of two or more "outside directors" within the
meaning of Section 162(m) of the Code.
2.7 Common Shares: Shares of common stock ($.20 par value) of the
Company.
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2.8 Company: W.R. Berkley Corporation, a Delaware corporation, and its
consolidated subsidiaries, or any successors thereto.
2.9 Cumulative Unit Value: The amount determined in accordance with
Section 7.2.
2.10 Disability: Disability, as defined in a Participant's employment
agreement with the Company, or, absent an agreement, in the Company's group
disability insurance contract.
2.11 Earnings: For any Fiscal Year, the consolidated net income of the
Company available to common stockholders, prepared in accordance with generally
accepted accounting principles, as reported in the Company's audited
consolidated financial statements for that Fiscal Year; adjusted on an after-tax
basis to (a) exclude (i) in its entirety any item of nonrecurring gain or loss
in excess of $5,000,000 and (ii) any accruals for this Plan and (b) to add back
write-offs required in connection with any acquisition in the year of
acquisition.
2.12 Earnings Per Share: For any Fiscal Year, Earnings divided by the
number of Common Shares used to determine the Company's basic earnings per share
for that Fiscal Year, as reported in the Company's audited consolidated
financial statements for that Fiscal Year.
2.13 Effective Date: The effective date of the Plan, which is January
1, 1997.
2.14 Fiscal Year: Any calendar year during the term of the Plan.
2.15 Incremental Unit Value: The amount determined in accordance with
Section 7.1.
2.16 Maximum Cumulative Unit Value: For all Units awarded as of the
beginning of any Fiscal Year, the amount determined by the Committee for those
Units when they are awarded.
2.17 Measuring Price: For each Unit awarded as of the Effective Date,
$50.75; for each Unit awarded thereafter, the closing price of a Common Share as
reported on the NASDAQ National Market System on the last day of the Fiscal Year
preceding the date as of which the Unit is awarded.
2.18 Participant: A key employee of the Company designated by the
Committee to participate in the Plan.
2.19 Plan: The W.R. Berkley Corporation Long-Term Incentive
Compensation Plan, as herein set forth and as it may be amended from time to
time.
2.20 Term of the Plan: The period commencing on the Effective Date and
ending five years after the final award of Units, in accordance with Section
5.1, or on such earlier date as the Maximum Cumulative Unit Value of such Units
may be achieved.
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2.21 Termination Without Cause: Termination of a Participant's
employment by the Company without "Cause," as defined in the Participant's
employment agreement with the Company, or, absent an agreement defining Cause,
termination of the Participant's employment by the Company for any reason other
than (i) continuing and material failure to fulfill his or her employment
obligations or willful misconduct or gross neglect in the performance of such
duties, (ii) commission of fraud, misappropriation or embezzlement in the
performance of such duties, or (iii) conviction of a felony, which, as
determined in good faith by the Board, constitutes a crime involving moral
turpitude and may result in material harm to the Company.
22.22 Unit: A unit of participation in the Plan awarded to a
Participant in accordance with Article V.
22.23 Valuation Date: The last day of any Fiscal Year.
ARTICLE III
ADMINISTRATION
3.1 The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum. Committee decisions and determinations
shall be made by a majority of its members present at a meeting at which a
quorum is present, and they shall be final. The actions of the Committee with
respect to the Plan shall be binding on all affected Participants. Any decision
or determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a vote at a meeting
duly called and held. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall deem
advisable.
3.2 The Committee shall have full authority, subject to the provisions
of the Plan (i) to select Participants and determine the extent and terms of
their participation; (ii) to adopt, amend and rescind such rules and regulations
as, in its opinion, may be advisable in the administration of the Plan, (iii) to
construe and interpret the Plan, the rules and regulations adopted thereunder
and any notice or Award Certificate given to a Participant; and (iv) to make all
other determinations that it deems necessary or advisable in the administration
of the Plan. The Committee may request advice or assistance or employ such
persons as it deems necessary for the proper administration of the Plan and may
rely on such advice or assistance; provided, however, that in making any
determinations with respect to the administration of the Plan, the Committee
shall at all times be obligated to act in good faith and in conformity with the
terms of the Plan.
3.3 In the event of any stock split, stock dividend, reclassification,
recapitalization or other change that affects the character or amount of
outstanding Common Shares and Earnings Per Share, the Committee shall make such
adjustments in the number of Units (whether authorized or outstanding and
unexercised), the Measuring Price or both as shall, in the sole judgment of the
Committee, be equitable and appropriate in order to make the value of such
Units, as nearly as may
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be practicable, equivalent to the value of Units outstanding and unexercised
immediately prior to such change. In no event, however, shall any such
adjustment give any Participant any additional benefits.
3.4 The Committee shall be precluded from increasing compensation
payable under the Plan to a Participant, including acceleration of payment and
increase of any amount payable, unless specifically provided for by the Plan.
ARTICLE IV
PARTICIPATION
4.1 Only key employees of the Company who, in the Committee's judgment,
will have a significant impact on the success of the business shall be eligible
to participate in the Plan. The Committee, in its sole discretion, shall select
the Participants.
4.2 In selecting Participants and in determining the number of Units to
be awarded to each Participant for any Fiscal Year, the Committee shall take
into account such factors as the individual's position, experience, knowledge,
responsibilities, advancement potential and past and anticipated contribution to
Company performance.
ARTICLE V
AWARD OF UNITS
5.1 Subject to adjustment as provided in Section 3.3, a maximum of
750,000 Units may be awarded under the Plan. A Participant who has been awarded
Units may be awarded additional Units from time to time and new Participants may
be awarded Units, both in the discretion of the Committee; provided, however,
that no Units shall be awarded after 2006.
5.2 Units shall be awarded solely by the Committee and shall be
evidenced by an Award Certificate, as provided in Article X.
5.3 Subject to adjustment as provided in Section 3.3, the maximum
number of Units awarded to any one individual shall not exceed 250,000 during
the Term of the Plan.
ARTICLE VI
TERM AND VESTING OF UNITS
6.1 Each Unit shall have a term of five years from the date of award,
subject to earlier termination (i) upon exercise by a Participant, (ii) as
provided in Article XI or (iii) upon achievement before five years of the Unit's
Maximum Cumulative Unit Value. Units shall be deemed to be
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awarded as of the Effective Date or the first day of any subsequent Fiscal Year
through 2006, as the case may be.
6.2 Units shall become vested on the Valuation Date immediately
preceding the fifth anniversary of the date of their award.
6.3 Notwithstanding Section 6.2, each Unit shall immediately become
vested in the event of (i) attainment of its Maximum Cumulative Unit Value, (ii)
a Participant's Termination Without Cause or (iii) termination of a
Participant's employment with the Company by reason of retirement on or after
attainment of age 65, death or Disability.
ARTICLE VII
DETERMINATION OF VALUE OF A UNIT
7.1 For any Fiscal Year, the Incremental Unit Value of a Unit shall be
equal to the product of (i) the Measuring Price, multiplied by (ii) .85 of the
percentage by which Earnings Per Share for the Fiscal Year exceeds Base Year
EPS. In the event Base Year EPS exceeds Earnings Per Share for any Fiscal Year,
the Incremental Unit Value for the Fiscal Year shall be zero. The Committee
shall notify each Participant of the Incremental Unit Value of his or her Units
for each Fiscal Year as soon as practicable after the Valuation Date for the
Fiscal Year.
7.2 The Incremental Unit Value of each Unit for any Fiscal Year shall
be cumulated with the Incremental Unit Value of the Unit for all prior Fiscal
Years from the date of the Unit's award. The cumulative amount thus determined
shall be the then Cumulative Unit Value of such Unit.
ARTICLE VIII
PAYMENT OF UNITS
8.1 Except as provided in Article XI, a Unit that is vested, in
accordance with Article VI, shall thereupon be exercised.
8.2 In order to exercise vested outstanding Units, a Participant (i)
shall give written notice of exercise, as provided in Section 8.3, and (ii)
shall deliver his or her Award Certificate to the Secretary of the Company, who
shall endorse thereon a notation of such exercise and return the same to the
Participant. The date of exercise of Units shall be the date on which the
Company receives the required documentation. Upon exercise of Units, the
Participant shall be entitled to receive their Cumulative Unit Value, determined
as of the concurrent or immediately preceding Valuation Date, but not in excess
of their Maximum Cumulative Unit Value.
8.3 Notice of exercise of vested Units shall be in writing addressed to
the Secretary of the Company. Payment of the amount due under the Plan shall be
made not later than five days
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following the date of exercise or the date of such other event as shall entitle
the Participant to payment; provided, however, that, before any payment may be
made, the Committee must certify in writing that all performance criteria under
the Plan have been met. Not less than 50 percent of any amount due shall be paid
in cash, and the balance shall be paid in cash or in Common Shares or both, as
determined by the Committee in its discretion.
ARTICLE IX
LIMITS ON TRANSFERABILITY OF UNITS
9.1 Each Participant shall file with the Committee a written
designation of one or more persons as the Beneficiary who shall be entitled to
receive any amount or any Common Shares payable under the Plan upon his or her
death. A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any previously designated
Beneficiary by filing a new designation with the Committee. 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 Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant, or if no Beneficiary survives to receive any amount payable under
the Plan by reason of the Participant's death, the Participant's estate shall be
treated as the Beneficiary for purposes of the Plan.
9.2 A Unit may be exercised only by the Participant to whom it was
awarded, except in the event of the Participant's death, when a Unit may be
exercised by his or her Beneficiary. Except as provided in Section 9.1, a
Participant may not transfer, assign, alienate or hypothecate any benefits under
the Plan.
ARTICLE X
AWARD CERTIFICATE
Promptly following the making of an award, the Company shall deliver to
the recipient an Award Certificate, specifying the terms and conditions of the
Unit. This writing shall be in such form and contain such provisions not
inconsistent with the Plan as the Committee shall prescribe.
ARTICLE XI
TERMINATION OF UNITS
11.1 An outstanding Unit awarded to a Participant shall be canceled and
all rights with respect thereto shall expire upon the earlier to occur of (i)
its exercise as provided in Section 8.1 or (ii) termination of the Participant's
employment with the Company; provided, however, that if such termination occurs
by reason of retirement on or after attainment of age 65, death, Disability or
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Termination Without Cause, or for any other reason specifically approved in
advance by the Committee, the term of such Unit shall continue for a period of
14 months from the date of termination (the "Extended Term"). For purposes of
this Section 11.1, the Cumulative Unit Value of such Unit shall be determined as
of the Valuation Date concurrent with or immediately preceding the end of the
Extended Term or any earlier exercise date, whichever is applicable. A Unit
whose term is continued for an Extended Term shall be deemed to be automatically
exercised as of the last Valuation Date within the Extended Term, unless sooner
exercised by the Participant or his or her legal representative.
11.2 Nothing contained in Section 11.1 shall be deemed to extend the
term of any Unit beyond the end of the Term of the Plan.
ARTICLE XII
TERMINATION AND AMENDMENT OF THE PLAN
The Company reserves the right to amend or terminate the Plan at any
time, by action of the Committee, but no such amendment or termination shall
adversely affect the rights of any Participant with respect to outstanding Units
held by the Participant without his or her written consent. No amendment shall
be effective prior to approval by the Company's stockholders to the extent that
such approval is required by Section 162(m) of the Code or is otherwise required
by law.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Nothing in the Plan, nor the award of any Unit, shall confer a
right to continue in the employment of the Company or affect any right of the
Company to terminate a Participant's employment.
13.2 The Plan shall be governed by and construed in accordance with the
laws of the State of Delaware without reference to principles of conflict of
laws.
13.3 The Company shall be authorized to withhold from any award or
payment it makes under the Plan to a Participant the amount of withholding taxes
due with respect to such award or payment and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.
13.4 Nothing in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval as may be
necessary, and such arrangements may be either generally applicable or
applicable only in specific cases.
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13.5 Participants shall not be required to make any payment or provide
any consideration for awards under the Plan other than the rendering of
services.
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