SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
W. R. BERKLEY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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W. R. BERKLEY CORPORATION
475 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2004
------------------------------
To The Stockholders of
W. R. BERKLEY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of W. R.
Berkley Corporation (the "Company") will be held at its executive offices at 475
Steamboat Road, Greenwich, Connecticut, on Tuesday, May 11, 2004 at 1:30 p.m.
for the following purposes:
(1) To elect four directors to serve until their successors are duly
elected and qualified;
(2) To approve the W. R. Berkley Corporation 2004 Long-Term Incentive Plan;
(3) To approve and adopt an amendment to the Company's Restated Certificate
of Incorporation to increase the authorized number of shares of common
stock from 150,000,000 to 300,000,000;
(4) To ratify the appointment of KPMG LLP as independent certified public
accountants for the Company for the fiscal year ending December 31,
2004; and
(5) To consider and act upon any other matters which may properly come
before the Annual Meeting or any adjournment thereof.
In accordance with the provisions of the Company's By-Laws, the Board of
Directors has fixed the close of business on March 19, 2004 as the date for
determining stockholders of record entitled to receive notice of, and to vote
at, the Annual Meeting.
Your attention is directed to the accompanying proxy statement.
You are cordially invited to attend the Annual Meeting. If you do not
expect to attend the Annual Meeting in person, please date, sign and return the
enclosed proxy as promptly as possible in the enclosed reply envelope.
By Order of the Board of Directors,
IRA S. LEDERMAN
Senior Vice President,
General Counsel and Secretary
Dated: April 12, 2004
W. R. BERKLEY CORPORATION
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2004
------------------------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of W. R. Berkley
Corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held at the executive offices of the Company, 475 Steamboat Road, Greenwich,
Connecticut, on Tuesday, May 11, 2004 at 1:30 p.m. and at any adjournment
thereof.
The giving of a proxy does not preclude a stockholder from voting in person
at the Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the Secretary
of the Company at its executive offices at any time prior to voting of the
shares represented by the earlier proxy. In addition, stockholders attending the
Annual Meeting may revoke their proxies by voting at the Annual Meeting.
The expense of preparing, printing and mailing this proxy statement will be
paid by the Company. The Company has engaged Georgeson Shareholder
Communications, Inc. to assist in the solicitation of proxies from stockholders
for a fee estimated at $6,500. In addition to the use of the mails, proxies may
be solicited personally or by telephone by regular employees of the Company
without additional compensation, as well as by Georgeson employees. The Company
will reimburse banks, brokers and other custodians, nominees and fiduciaries for
their direct costs in sending the proxy materials to the beneficial owners of
the Company's common stock.
The Annual Report of the Company for the fiscal year ended December 31,
2003 is being mailed to all stockholders with this proxy statement. The
approximate mailing date is April 12, 2004.
A list of stockholders will be available for inspection during business
hours for at least ten days prior to the Annual Meeting at the executive offices
of the Company at 475 Steamboat Road, Greenwich, Connecticut 06830.
The matters to be acted upon are described in this proxy statement. Proxies
will be voted at the Annual Meeting, or at any adjournment thereof, at which a
quorum is present, in accordance with the directions on the proxy. Votes cast by
proxy or in person at the Annual Meeting will be tabulated by election
inspectors appointed for the Annual Meeting. The election inspectors will also
determine whether a quorum is present. The holders of a majority of the common
stock outstanding and entitled to vote who are present either in person or
represented by proxy constitute a quorum for the Annual Meeting. The election
inspectors will treat abstentions and "broker non-votes" as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum, but as unvoted for purposes of determining the approval of any matter
submitted. A "broker non-vote" is when a broker indicates on a proxy that it
does not have discretionary authority as to certain shares to vote on a
particular matter and has not received instructions from the beneficial owner
with respect to that matter.
1
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on March 19, 2004 are
entitled to receive notice of and to vote at the Annual Meeting. The number of
shares of voting stock of the Company outstanding and entitled to vote on that
date was 83,784,577 shares of common stock. Each such share of common stock is
entitled to one vote. At March 19, 2004, executive officers and directors of the
Company owned or controlled approximately 15.0% of the outstanding common stock.
Information as to persons beneficially owning 5% or more of the common stock may
be found under the heading "Principal Stockholders" below.
Unless otherwise directed in the proxy, the persons named therein will vote
"FOR" the election of the director nominees listed below, "FOR" the approval of
the W. R. Berkley Corporation 2004 Long-Term Incentive Plan, "FOR" the approval
of the amendment to the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of common stock from 150,000,000 to
300,000,000 and "FOR" the ratification of the appointment of KPMG LLP as the
Company's independent certified public accountants for its fiscal year ending
December 31, 2004. If a returned proxy does not specify a vote for or against a
proposal, it will be voted in favor thereof.
The election of directors, the approval of the W. R. Berkley Corporation
2004 Long-Term Incentive Plan and the ratification of the appointment of KPMG
LLP require the affirmative vote of a majority of the shares present at the
meeting to constitute the action of the stockholders. The approval of the
amendment to the Company's Restated Certificate of Incorporation requires the
affirmative vote of a majority of the shares of common stock outstanding and
entitled to vote at the Annual Meeting.
As of the date hereof, the Board of Directors knows of no other business
that will be presented for consideration at the Annual Meeting. If other
business shall properly come before the Annual Meeting, the persons named in the
proxy will vote according to their best judgment.
ELECTION OF DIRECTORS
As permitted by Delaware law, the Board of Directors is divided into three
classes, the classes being divided as equally as possible and each class having
a term of three years. Each year the term of office of one class expires. This
year the term of a class consisting of three directors expires. It is the
intention of the Board that the shares represented by proxy, unless otherwise
indicated therein, will be voted for the election of William R. Berkley, Jr.,
Ronald E. Blaylock and Mark E. Brockbank as directors to hold office for a term
of three years until the Annual Meeting of Stockholders in 2007 and until their
respective successors are duly elected and qualified. In addition, it is the
intention of the Board that the shares represented by proxy, unless otherwise
indicated thereon, will be voted for the election of Rodney A. Hawes, Jr. to
hold office for a term of one year until the Annual Meeting of Stockholders in
2005 and until his successor is duly elected and qualified.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event any such nominee is unable to serve. However, the
Board has no reason to believe that any nominee will be unable to serve if
elected. The proxies cannot be voted for a greater number of persons than the
four named nominees.
2
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES FOR DIRECTOR.
The following table sets forth information regarding each nominee and the
remaining directors who will continue in office after the Annual Meeting.
<Table>
<Caption>
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
NOMINEES TO SERVE IN OFFICE UNTIL 2007 SINCE/AGE AND OTHER INFORMATION
- -------------------------------------- ------------ ------------------------------------------
William R. Berkley, Jr.......................... 2001 Senior Vice President -- Specialty
Age 31 Operations of the Company since January
2003 and Vice Chairman of Berkley
International, LLC since May 2002. Mr.
Berkley served previously as Senior Vice
President of the Company from January
2002, Vice President of the Company from
May 2000 to January 2002, President of
Berkley International, LLC from January
2001 to May 2002 and Executive Vice Presi-
dent of Berkley International, LLC from
March 2000 to January 2001. He joined the
Company in September 1997. From July 1995
to August 1997, Mr. Berkley was employed
in the Corporate Finance Department of
Merrill Lynch Investment Company. Mr.
Berkley is also a director of Associated
Community Bancorp, Inc. and its
Connecticut Community Bank, N.A.
subsidiary; Interlaken Capital, Inc.; LD
Realty Advisors LLC; Strategic Dis-
tribution, Inc.; and W. R. Berkley
Corporation Charitable Foundation. Mr.
Berkley is the son of William R. Berkley.
Ronald E. Blaylock(1)(2)(3)..................... 2001 Founder, Chairman and Chief Executive Of-
Age 44 ficer of Blaylock & Partners, L.P., an
investment banking firm. Mr. Blaylock held
senior management positions with
PaineWebber Group and Citicorp before
launching Blaylock & Partners in 1993. Mr.
Blaylock is also a director of Radio One,
Inc.
Mark E. Brockbank(3)(4)......................... 2001 Mr. Brockbank, retired, served from 1995
Age 52 to 2000 as Chief Executive of XL Brockbank
LTD, an underwriting management agency at
Lloyd's of London. Mr. Brockbank was a
founder of the predecessor firm of XL
Brockbank LTD and was a director of XL
Brockbank LTD from 1983 to 2000.
</Table>
3
<Table>
<Caption>
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
NOMINEE TO SERVE IN OFFICE UNTIL 2005 SINCE/AGE AND OTHER INFORMATION
- ------------------------------------- ------------ -----------------------------------------
Rodney A. Hawes, Jr............................. -- / Mr. Hawes is associated with Insurance
Age 66 Investment Associates ("IIA"), which he
founded in 1972. IIA provides investment
banking services to the insurance
industry. Mr. Hawes was the Chairman of
the Board and Chief Executive Officer of
Life Re Corporation from 1988 to 1998.
</Table>
<Table>
<Caption>
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
DIRECTORS TO CONTINUE IN OFFICE UNTIL 2005 SINCE/AGE AND OTHER INFORMATION
- ------------------------------------------ ------------ -----------------------------------------
Richard G. Merrill(3)(4)........................ 1994 Executive Vice President of Prudential
Age 73 Insurance Company of America from August
1987 to March 1991 when he retired. Prior
thereto, Mr. Merrill served as Chairman
and President of Prudential Asset
Management Company since 1985. Mr.
Merrill is also a director of Sysco
Corporation.
Jack H. Nusbaum(2)(5)(6)........................ 1967 Chairman of the New York law firm of
Age 63 Willkie Farr & Gallagher LLP, where he
has been a partner for more than the last
five years. He is also a director of
Strategic Distribution, Inc. and The
Topps Company, Inc.
Mark L. Shapiro(1)(2)(3)........................ 1974 Since September 1998, Mr. Shapiro has
Age 60 been a private investor. From July 1997
through August 1998, Mr. Shapiro was a
Senior Consultant to the Export-Import
Bank of the United States. For more than
five years prior thereto, he was a
Managing Director in the investment
banking firm of Schroder & Co. Inc.
</Table>
4
<Table>
<Caption>
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
DIRECTORS TO CONTINUE IN OFFICE UNTIL 2006 SINCE/AGE AND OTHER INFORMATION
- ------------------------------------------ ------------ -----------------------------------------
William R. Berkley(5)(6)........................ 1967 Chairman of the Board and Chief Executive
Age 58 Officer of the Company since its
formation in 1967. He also serves as
President and Chief Operating Officer, a
position which he has held since March 1,
2000 and has held at various times from
1967 to 1995. Mr. Berkley also serves as
Chairman of the Board or director of a
number of public and private companies.
These include Associated Community
Bancorp, Inc. and its Connecticut
Community Bank, N.A. subsidiary; Interla-
ken Capital, Inc.; Strategic
Distribution, Inc.; The First Marblehead
Corporation; and W. R. Berkley
Corporation Charitable Foundation. Mr.
Berkley is the father of William R.
Berkley, Jr.
George G. Daly(3)(4)............................ 1998 Fingerhut Professor and Dean Emeritus,
Age 63 Stern School of Business, New York
University, since August 2002.
Previously, he was Dean, Stern School of
Business, and Dean Richard R. West
Professor of Business, New York
University, for more than five years. In
addition to his academic career, Dr. Daly
served as Chief Economist at the U.S.
Office of Energy Research and Development
in 1974. He is also a director of The
First Marblehead Corporation.
Philip J. Ablove(1)(3).......................... 2002 Executive Vice President and Chief
Age 63 Financial Officer of Pioneer Companies,
Inc. from March 1996 to December 2002,
when he retired. Mr. Ablove was Senior
Vice President and Chief Financial
Officer of W. R. Berkley Corporation from
July 1973 until April 1983.
</Table>
- ------------------------------
(1) Member of Audit Committee.
(2) Member of Business Ethics Committee.
(3) Member of Nominating and Corporate Governance Committee.
(4) Member of Compensation and Stock Option Committee.
(5) Member of Executive Committee.
(6) Member of Pricing Committee.
5
CORPORATE GOVERNANCE AND BOARD MATTERS
Our Board of Directors is committed to sound and effective corporate
governance practices. Accordingly, our Board has adopted written Corporate
Governance Guidelines, which address, among other things, (1) director
qualification standards, (2) director responsibilities, (3) director access to
management and, as necessary and appropriate, independent advisors, (4) director
compensation, (5) director orientation and continuing education, (6) management
succession, and (7) annual performance evaluation of the Board.
The Board of Directors has standing committees including: the Audit
Committee, Compensation and Stock Option Committee, and Nominating and Corporate
Governance Committee. Each of these committees has a written charter. Our
Corporate Governance Guidelines and the charters for each of these standing
committees are available for review on our website at www.wrberkley.com, and the
Audit Committee charter is also attached as Annex A hereto.
The Board is currently composed of nine directors, all of whom, other than
Messrs. William R. Berkley, William R. Berkley, Jr. and Jack H. Nusbaum, have
been determined by the Board to be independent in accordance with applicable New
York Stock Exchange rules. At this Annual Meeting, the Board is being expanded
to ten directors through the proposed addition of an additional independent
director.
The Board held five meetings during 2003. No director attended fewer than
75% of the total number of meetings of the Board and all committees on which he
served. The Company encourages its directors to attend its Annual Meeting of
Stockholders, and at last years' meeting at least two directors were in
attendance.
BOARD COMMITTEES
AUDIT COMMITTEE. The Audit Committee is appointed by the Board to assist
the Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the independent auditors' qualifications and independence, (3) the
performance of the Company's internal audit function and independent auditors,
and (4) compliance by the Company with legal and regulatory requirements. The
Audit Committee has also adopted procedures to receive, retain and treat any
good faith complaints received regarding accounting, internal accounting
controls or auditing matters and provide for the anonymous, confidential
submission of concerns regarding these matters.
The Audit Committee is currently composed of Messrs. Shapiro, Blaylock and
Ablove, all of whom are independent under the rules of the SEC and the New York
Stock Exchange. Mr. Shapiro is the current Chair of the committee. The Board has
identified Mr. Shapiro as a current member of our Audit Committee who meets the
definition of an "audit committee financial expert" recently established by the
SEC. During fiscal 2003, the Audit Committee held seven meetings.
The Audit Committee has determined to engage KPMG LLP as independent
auditors for fiscal year 2004 and is recommending that our stockholders ratify
this appointment at our annual meeting. The report of our Audit Committee is
found on page 25 of this proxy statement.
COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock Option
Committee has overall responsibility for discharging the Board's
responsibilities relating to the compensation of the Company's senior executive
officers and directors.
6
The Compensation and Stock Option Committee is currently composed of
Messrs. Merrill, Brockbank and Daly, all of whom are independent under the rules
of the New York Stock Exchange. Mr. Merrill is the current Chair of the
committee. During fiscal 2003, the Compensation and Stock Option Committee held
nine meetings and took action by unanimous written consent on two occasions. The
report of our Compensation and Stock Option Committee on executive compensation
is found on page 12 of this proxy statement.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and
Corporate Governance Committee was formed in 2004 to assist the Board in (1)
identifying individuals qualified to become members of the Board (consistent
with criteria to be approved by the Board), (2) recommending that the Board
select the director nominees for the next annual meeting of stockholders or for
other vacancies on the Board, (3) overseeing the evaluation of the Board and
management, (4) reviewing the corporate governance guidelines and the corporate
code of ethics and (5) generally advising the Board on corporate governance and
related matters. Our Corporate Governance Guidelines address director
qualification standards.
The Nominating and Corporate Governance Committee will consider qualified
director nominees recommended by stockholders. Nominations for consideration by
the Nominating and Corporate Governance Committee, together with a description
of his or her qualifications and other relevant information, should be sent to
the attention of the General Counsel, c/o W. R. Berkley Corporation, 475
Steamboat Road, Greenwich, Connecticut 06830. Stockholders may also follow the
nomination procedures described under "Stockholder Nominations for Board
Membership and Other Proposals for 2005 Annual Meeting" below.
The Nominating and Corporate Governance Committee is currently composed of
Messrs. Ablove, Blaylock, Brockbank, Daly, Merrill and Shapiro, all of whom are
considered independent under the rules of the New York Stock Exchange.
OTHER COMMITTEES. During 2003, the Board had three standing committees in
addition to the committees set forth above: the Executive Committee, the Pricing
Committee and the Business Ethics Committee.
The Executive Committee is authorized to act on behalf of the Board during
periods between Board meetings. The Committee is composed of Messrs. William R.
Berkley and Nusbaum. During 2003, the Committee took action by unanimous written
consent on one occasion.
The Pricing Committee, which during 2003 was composed of Messrs. William R.
Berkley and Nusbaum, acts in the event of certain offerings of the Company's
securities with respect to such matters as determining the price and terms at
which such securities shall be sold to underwriters and the public. During 2003,
the Committee held two meetings.
The Business Ethics Committee, which during 2003 was composed of Messrs.
Blaylock, Nusbaum and Shapiro, administers the Company-wide business ethics
program. The Committee reviews disclosures made by Company employees under the
Company's Statement of Business Ethics, determines if any issue presented raises
an ethics concern and takes any appropriate action. During 2003, the Committee
held one meeting.
7
CODE OF ETHICS
We have had a Statement of Business Ethics in place for many years. This
code, which applies to all of our employees, is a statement of our high
standards for ethical behavior and legal compliance, and governs the manner in
which we conduct our business. This Statement of Business Ethics covers all
areas of professional conduct, including employment policies, conflicts of
interest, intellectual property and the protection of confidential information,
as well as adherence to the laws and regulations applicable to the conduct of
our business.
In 2004, we adopted a Code of Ethics for Senior Financial Officers. This
Code of Ethics, which applies to our chief executive officer, chief financial
officer and controller, addresses the ethical handling of conflicts of interest,
the accuracy and timeliness of SEC disclosure and other public communications
and compliance with law.
A copy of our Statement of Business Ethics and Code of Ethics for Senior
Financial Officers can be found on our website at www.wrberkley.com. We intend
to disclose any amendments to these procedures, and waivers of these policies
for executive officers and directors, on our website.
COMMUNICATIONS WITH NON-MANAGEMENT DIRECTORS; EXECUTIVE SESSIONS
A stockholder who has an interest in communicating with management or
non-management members of the Board of Directors may do so by directing the
communication to the General Counsel. Information about the Company, including
with respect to its corporate governance policies and copies of its SEC filings,
is available on our website at www.wrberkley.com. Our filings with the SEC are
also available at the SEC's website at www.sec.gov. Persons who desire to
communicate with the non-management directors should send their correspondence
addressed to the attention of the General Counsel, c/o W. R. Berkley
Corporation, 475 Steamboat Road, Greenwich, Connecticut 06830. The General
Counsel will provide a summary of all appropriate communications to the
addressed non-management directors and will provide a complete copy of such
communications upon the request of the addressed director.
In accordance with applicable New York Stock Exchange Rules, the
non-management directors will meet regularly in executive session, with an
additional meeting of independent directors only to be held annually.
DIRECTOR COMPENSATION
For 2003, each director received a quarterly retainer of $6,000 and a fee
of $1,500 for each Board meeting attended. In addition, on May 20, 2003,
pursuant to the Company's 1997 Directors Stock Plan, each continuing director
received 237 shares of common stock (adjusted for the 3-for-2 stock split
effected in August 2003). The number of shares to be granted to each director
under such Plan for each year is determined by dividing $7,500 by the closing
price of the common stock on the trading day preceding the date of the Annual
Meeting of Stockholders for the year in which the grant is made. For 2003, the
annual retainer, the fees and the fair market value of such shares of common
stock on the date of grant are included under "Executive Compensation" in the
Summary Compensation Table for William R. Berkley. These shares of common stock
are also included in the tables under "Principal Stockholders." Members of the
Audit Committee and the Compensation and Stock Option Committee, which are both
comprised solely of directors that are independent under the rules of the New
York
8
Stock Exchange, each receive an annual stipend of $5,000, with their respective
Chairmen each receiving an additional $5,000 annual stipend. Members of the
Audit Committee and the Compensation and Stock Option Committee also each
receive $1,000 for each substantive meeting attended.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of March 19, 2004 (except as otherwise
noted below) those persons known by the Company to be the beneficial owners of
more than 5% of the common stock:
<Table>
<Caption>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------------------------ -------------------------- --------
William R. Berkley 11,472,724(2) 13.7%
475 Steamboat Road
Greenwich, CT 06830
Barclays Global Investors, NA 7,736,716(3) 9.3%(6)
45 Fremont Street
San Francisco, CA 94105
Gilder, Gagnon, Howe & Co. LLC 6,122,837(4) 7.3%(6)
1775 Broadway
New York, NY 10019
Janus Capital Management LLC 4,590,133(5) 5.5%(6)
100 Fillmore Street
Denver, CO 80206
</Table>
- ------------------------------
(1) These amounts reflect the 3-for-2 common stock split effected on August 27,
2003.
(2) Includes 4,726,674 shares of common stock held in a limited liability
company of which Mr. Berkley is the sole member, 2,255,625 shares which are
subject to currently exercisable stock options, 202,500 shares of common
stock underlying restricted stock units which are subject to forfeiture
until vested, 28,310 shares held by Mr. Berkley's wife, as to which shares
he disclaims beneficial ownership, and 7,651 shares held in several accounts
for his children as to which Mr. Berkley is a custodian.
(3) Information as of December 31, 2003 based on a Schedule 13G, dated February
13, 2004, filed with the Securities and Exchange Commission on behalf of
Barclays Global Investors, NA ("Barclays"). The Schedule 13G reported
ownership of 7,736,716 shares of common stock then outstanding. The Schedule
13G reported that Barclays has sole voting power over 6,779,559 shares and
sole dispositive power over 6,783,816 shares.
(4) Information as of December 31, 2003 based on a Schedule 13G, dated February
17, 2004, filed with the Securities and Exchange Commission on behalf of
Gilder, Gagnon, Howe & Co. LLC ("GGH&C"). The Schedule 13G reported
ownership of 6,122,837 shares of common stock then outstanding. The Schedule
13G reported that GGH&C has sole voting power over 54,947 shares and shared
dispositive power over 6,122,837 shares.
(5) Information as of December 31, 2003 based on a Schedule 13G, dated February
16, 2004, filed with the Securities and Exchange Commission on behalf of
Janus Capital Management LLC ("Janus"). The Schedule 13G reported ownership
of 4,590,133 shares of common stock then outstanding. The Schedule 13G
reported that Janus has sole voting power and dispositive power over
4,562,983 shares and shared voting power and dispositive power over 27,150
shares.
(6) The percent of class shown was based on the shares of common stock reported
on the respective Schedules 13G and the total number of shares outstanding
as of December 31, 2003. Assuming the beneficial ownership for these holders
did not change, the percent of class based on the shares of common stock
outstanding as of March 19, 2004 would be 9.2%, 7.3% and 5.5%, respectively.
9
The following table sets forth information as of March 19, 2004 regarding
ownership by all directors and executive officers of the Company, as a group,
and each director and each executive officer named in the Summary Compensation
Table, individually, of common stock. Except as described in the footnotes
below, all amounts reflected in the table represent shares the beneficial owners
of which have sole voting and investment power.
<Table>
<Caption>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------ -------------------------- --------
All directors and executive officers
as a group (18 persons) 12,539,456(2)(3)(4)(5)(6) 15.0%
Philip J. Ablove 2,140 *
Eugene G. Ballard 45,375(3) *
William R. Berkley 11,472,724(2)(3) 13.7%
William R. Berkley, Jr. 94,992(3)(7) *
Ronald E. Blaylock 5,025 *
Mark E. Brockbank 356,525 *
George G. Daly 5,289 *
Ira S. Lederman 118,274(3)(4) *
James W. McCleary 118,175(3) *
Richard G. Merrill 28,763(5) *
Jack H. Nusbaum 26,625 *
Mark L. Shapiro 8,404 *
James G. Shiel 100,818(3) *
</Table>
- ------------------------------
* Less than 1%.
(1) These amounts reflect the 3-for-2 common stock split effected on August 27,
2003.
(2) Includes 4,726,674 shares of common stock held in a limited liability
company of which Mr. Berkley is the sole member, 28,310 shares held by Mr.
Berkley's wife, as to which shares he disclaims beneficial ownership, and
7,651 shares held in several accounts for his children as to which Mr.
Berkley is a custodian.
(3) The amounts shown for Messrs. Ballard, Berkley, Berkley, Jr., Lederman,
McCleary and Shiel include 28,125, 2,255,625, 74,249, 62,636, 63,562 and
69,750 shares of common stock, respectively, which are subject to stock
options that are either currently exercisable or are exercisable within
sixty days of March 19, 2004, and 15,000, 202,500, 15,000, 15,000, 11,250,
and 11,250 shares of common stock underlying restricted stock units (RSUs),
respectively, which are subject to forfeiture until vested.
(4) The amount shown for Mr. Lederman includes 2,712 shares of common stock held
in accounts for his children, as to which Mr. Lederman is a custodian.
(5) The amount shown for Mr. Merrill includes 26,137 shares of common stock held
in a family trust with Mr. Merrill and his spouse as trustees.
(6) The amounts shown for all directors and executive officers as a group
include an aggregate of 2,675,450 shares of common stock which are subject
to currently exercisable stock options held by executive officers of the
Company, 300,000 shares of common stock underlying RSUs which are subject to
forfeiture until vested, and 3,305 shares of common stock which are held by
executive officers under the Company's Profit Sharing Plan.
(7) Of the amount shown for Mr. Berkley, Jr., 5,218 shares are included in the
amount reported by William R. Berkley.
The Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date
result in a change of control of the Company. Under applicable Insurance Holding
Company Acts in various states, a potential owner cannot exercise voting control
over an amount in excess of 10% of the Company's outstanding voting securities
(5% in the State of Florida) without obtaining prior regulatory approval.
10
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During 2003, the Company engaged in certain transactions with Interlaken
Capital, Inc., a company substantially owned and controlled by William R.
Berkley, the Company's Chairman of the Board and Chief Executive Officer. The
Company paid Interlaken $150,000 for services provided by certain employees of
Interlaken in connection with the review of certain private equity transactions.
Interlaken was reimbursed by the Company on a time and expense basis. Interlaken
paid rent in the amount of $22,119 to the Company for separate office space on
the Company's premises. Certain of the Company's employees perform services for
Interlaken as well for which Interlaken compensates them separately.
During 2001, certain subsidiaries of the Company invested an aggregate of
$5,000,000 in unsecured promissory notes of The First Marblehead Corporation, a
company of which William R. Berkley is a director and in which William R.
Berkley and William R. Berkley, Jr. have, directly or indirectly, minority
equity interests. The notes were scheduled to mature in 2004 and to bear base
interest at a minimum rate of 10% per annum and bonus interest at the rate of
15% per annum. During 2003, the outstanding principal balance of the notes and
all base and bonus interest thereon were pre-paid. The Company's effective rate
of return on its investment in the notes was in excess of 24% per annum.
Jack H. Nusbaum, a director of the Company, is Chairman of Willkie Farr &
Gallagher LLP, outside counsel to the Company.
11
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") is comprised
entirely of independent, non-management directors. The Committee has overall
responsibility for discharging the Board of Director's responsibility relating
to compensation of the Chief Executive Officer ("CEO"), other senior executive
officers and directors.
COMPENSATION PHILOSOPHY. The Compensation and Stock Option Committee
follows a compensation philosophy under which the principal determinants of
compensation are both the current and long-term financial performance of the
Company, together with achievement of non-financial corporate objectives and
individual performance. The Company's performance is reviewed by the Committee
in both absolute terms and relative to the performance of the property and
casualty insurance industry as a whole. The Committee believes that this
approach provides incentives to the CEO and other management personnel to focus
on meeting key corporate strategic objectives, such as enhancing returns and
driving profitable growth while recognizing individual achievements. Focusing on
these key objectives should in turn enhance stockholder value. The Committee
also believes that it continues to be important to use compensation to attract
and reward executives who contribute to the Company's long-term success by
demonstrated, sustained performance.
To this end, the Company relies on salary, annual cash incentive awards,
equity-based compensation through the 2003 Stock Incentive Plan and long-term
cash incentives through the Long-Term Incentive Compensation Plan ("LTIP"). The
Company has not entered into employment agreements with any of its officers.
For 2003, the Committee retained The Ross Companies ("Ross") to provide
advice with respect to executive compensation. Ross advised the Committee with
respect to the plans referred to below and with respect to the compensation of
the CEO for 2003.
2003 COMPANY PERFORMANCE. Because financial performance is a critical
driver of executive compensation, the following is an overview of the Company's
2003 performance. This past year was an exceptional year for W. R. Berkley
Corporation as the Company delivered record results:
* Return on stockholders' equity rose to 25.3%, the highest in nearly three
decades, surpassing the Company's targeted return of 15%
* The Company's combined ratio performance in 2003 exceeded the industry's
overall combined ratio performance by more than 1,000 basis points
* Net income reached a new high of $3.87 per share, advancing 75% over 2002
* Net premiums written increased 35% to $3.7 billion
* Cash flow from operations increased 50% to $1.4 billion
* Total stockholder return over the three year period ending December 31,
2003 was 71%
Through the leadership of the CEO and the other executive officers, the
Company achieved these results by capitalizing on increasing insurance prices
and improving insurance policy terms and conditions, while improving the
Company's market position relative to its competitors.
12
BASE SALARY. With respect to base compensation in 2003 for executive
officers other than the CEO, the Committee considered the Company's performance,
past pay levels, existing market conditions and recommendations of the CEO with
respect to such compensation.
ANNUAL INCENTIVE. The annual incentive compensation for executive
officers, other than the CEO, for 2003 was based primarily on the achievement of
return on capital goals for 2003 set for the Company as a whole, and for those
executives with business segment responsibility, the specific business segment
returns. Additional individual goals were established for each executive based
on the strategic direction for the areas managed. Actual awards for 2003 were
determined by the CEO and reviewed with the Committee. The CEO provided the
Committee a summary performance review of each executive officer and the heads
of the significant operating units of the Company. Due to positive results in
many of the business segments, and for the Company as a whole, most executive
officers received an increase in annual incentive compensation over prior years.
EQUITY-BASED COMPENSATION. It has generally been the Company's practice to
grant stock options every other year, although the Committee may also grant
options from time to time in its discretion, and the Committee may change such
practice if it determines a change to be in the Company's best interest. Under
the 2003 Stock Incentive Plan, options and other equity-based awards can be
granted to the CEO and to other executives on a discretionary basis. In the
past, the Committee has exercised this discretion to make grants based on an
evaluation of each individual's ability to contribute to the Company's long-term
growth and profitability. In addition, the Committee has also considered the
level of a recipient's annual salary. In 2003, the Committee did not make grants
under the 2003 Stock Incentive Plan to the CEO or other executive officers.
In April 2003, the Committee made restricted stock unit grants from the
Company's treasury shares to the CEO and certain executive officers. The
Committee believes that these restricted stock unit grants will provide a strong
retention vehicle for senior executives while further aligning their interests
with those of the stockholders. Alignment with stockholder interests comes not
only through stock price appreciation, but also through downside exposure and
the dividend stream. Restricted stock units for 97,500 shares of common stock
(adjusted for the 3 for 2 stock split) were granted to executive officers other
than the CEO. Grant date values for units granted to the five executive officers
whose compensation is disclosed in the proxy statement are set forth in the
Summary Compensation Table under the heading "Executive Compensation." These
restricted stock units vest after five years, with no incremental vesting of the
units during the five year period, and the receipt of the actual shares are
deferred until the executive retires from the Company or as otherwise provided
in the agreement. This deferral allows recipients to remain fully invested in
the Company and aligned with stockholders for the remainder of their careers.
LONG-TERM INCENTIVE COMPENSATION PLAN. No new units were awarded in 2003
under the LTIP. Outstanding awards were adjusted to reflect the 3 for 2 common
stock split that occurred in 2003. The units awarded in 2001 became fully vested
as of December 31, 2003 after reaching the maximum unit value. The maximum unit
value was achieved on an accelerated basis because the Company significantly
exceeded its expected performance during the relevant three-year period. Book
value per share grew by 71% and stock price grew by 67% over this period. The
Committee believes the LTIP provided management with proper incentives to
increase stockholder value. The Committee further noted that the units granted
originally under the LTIP in 1997 vested with a payout of less
13
than ten percent of the maximum unit value, because the earnings per share goals
were not fully satisfied.
The 2001 LTIP awards, representing 55,500 units in the aggregate, and
valued at $250 per unit, were paid to executive officers, including the CEO, on
February 12, 2004. Payment values for the five executive officers whose
compensation is disclosed in the proxy statement are set forth in the Summary
Compensation Table.
CEO COMPENSATION. In general, the CEO's compensation is based on the
Committee's evaluation of corporate performance and the CEO's individual
performance based on specific targets.
With respect to base salary, based on the compensation philosophy stated
above and the advice of Ross, the Committee determined that the CEO's salary for
2003 should remain at $1,000,000.
With respect to the CEO's annual incentive bonus for 2003, the Committee
established financial performance targets and individual performance goals for
the CEO. Quantitative financial goals represented 67% of the target annual
incentive compensation for the CEO and individual non-financial goals
represented 33% of that target. Quantitative financial performance targets were
based on the Company's earnings per share, net income, net premiums written,
return on equity and the Company's combined ratio as compared to industry. The
targets were then compared with actual Company performance to determine the
level of achievement and amount of annual incentive compensation earned by the
CEO for the quantitative portion of the award. At the beginning of the year, the
Committee and the CEO agreed upon several objective, individual non-financial
goals that were deemed to be in line with the strategic needs of the Company. At
the end of the year, the Committee reviewed achievement of these individual
non-financial goals to determine the amount of incentive compensation earned for
that component.
Based on the results for 2003 outlined above, the Company exceeded target
performance with respect to all quantitative financial goals in 2003. The CEO
also achieved substantially all of the individual non-financial goals
established. As a result of these achievements, the Committee approved an annual
incentive payment for the CEO under the Annual Incentive Compensation Plan of
$4,933,562, which was above his target 2003 incentive compensation bonus amount,
but below the maximum amount allowable. This annual incentive bonus is disclosed
in the Summary Compensation Table.
The Committee believes that the CEO's leadership has contributed greatly to
the Company's long-term financial strength and is important to the Company's
future earnings power. Therefore, as discussed earlier under Equity-Based
Compensation, restricted stock units for 202,500 shares of Common Stock
(adjusted for the 3 for 2 stock split) were granted to the CEO in April 2003.
These units vest at the end of five years, with no incremental vesting of the
units during the five year period, and the receipt of the actual shares is
deferred until retirement or as otherwise provided in the grant agreement. In
addition, for the financial period 2001 through 2003, the CEO earned an award
under the LTIP of 40,000 units, valued at $250 per unit, for a total of
$10,000,000, as described above under the heading Long-Term Incentive
Compensation Plan and as disclosed in the Summary Compensation Table.
The Committee recognizes the long-standing stock ownership position of the
CEO and his continued commitment to the Company demonstrated by his acquisition
of additional shares of
14
common stock of the Company from time to time. The Committee further notes that
the CEO has not sold any shares in over 25 years. The Committee believes this
level of commitment truly aligns the CEO with the long-term interests of the
stockholders.
POLICY ON QUALIFYING COMPENSATION FOR DEDUCTIBILITY. For purposes of
setting incentive compensation for the CEO, the Committee has determined that
the Company should consider the limitations on tax deductibility imposed under
Section 162(m) of the Internal Revenue Code. Section 162(m) disallows deductions
for compensation in excess of $1,000,000 per year paid by a public corporation
to certain of its executives unless certain criteria are met. In order to meet
the criteria, the Committee has determined that, subject to the matters
discussed below, the CEO's annual and long-term incentive compensation should be
structured as "qualified performance-based compensation," which is exempt from
the deduction limit. In general, this rule requires that the CEO's incentive
compensation be based on attainment of one or more objective performance goals,
which include quantitative financial goals and individual non-financial goals,
and that the Company's stockholders approve both the performance criteria and
the total amount that can be earned. For these reasons, the incentive
compensation for the CEO is generally payable and/or granted under the Company's
Annual Incentive Compensation Plan, LTIP and 2003 Stock Incentive Plan, each of
which was approved by stockholders of the Company and is designed so that
compensation payable thereunder, or attributable to the exercise of options,
will generally be exempt from the deduction limits. The Committee may, in its
discretion and where deemed appropriate, pay compensation to the CEO or other
executive officers in addition to compensation earned under these plans. Such
additional compensation may not be "qualified performance-based compensation"
and would not be exempt from the deduction limits. The Committee believes that
at times there are circumstances where the payment of such additional
compensation may be justified as a means of furthering the Company's interest in
retaining and rewarding its key personnel.
Compensation and Stock Option
Committee
Richard G. Merrill, Chairman
Mark E. Brockbank
George G. Daly
April 1, 2004
The above report of the Compensation and Stock Option Committee shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
15
EXECUTIVE COMPENSATION
The following table sets forth all the cash and non-cash compensation for
each of the last three fiscal years awarded to or earned by the Chairman of the
Board and Chief Executive Officer of the Company and the four other highest paid
executive officers of the Company whose earnings exceeded $100,000 in salary and
bonus.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------ ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) (#)(2) ($)
- ------------------ ---- --------- ---------- ------------ ---------- ---------- ----------
William R. Berkley............ 2003 1,000,000 4,933,562 268,110(3) 5,751,000 -- 10,000,000(4)
Chairman of the Board and 2002 1,000,000 5,036,000 269,140(6) -- 168,750 --
Chief Executive Officer 2001 1,000,000 2,000,000 257,385(7) -- 900,000 912,000
James G. Shiel................ 2003 405,000 215,050 -- 319,500 -- 500,000(4)
Senior Vice President -- 2002 385,000 200,000 -- -- 28,125 --
Investments 2001 367,500 175,000 -- -- -- 33,600
James W. McCleary............. 2003 399,000(8) 225,050 -- 319,500 -- 500,000(4)
Senior Vice President -- 2002 375,000 200,000 -- -- 33,750 --
Reinsurance Operations; 2001 293,710 175,000 -- -- -- 33,600
President, Facultative
ReSources, Inc.
Eugene G. Ballard............. 2003 390,000 215,050 -- 426,000 -- 500,000(4)
Senior Vice President -- 2002 360,000 185,000 -- -- 33,750 --
Chief Financial Officer and
Treasurer 2001 335,000 100,000 -- -- -- --
Ira S. Lederman............... 2003 385,000 215,100 -- 426,000 -- 500,000(4)
Senior Vice President -- 2002 350,000 185,000 -- -- 33,750 --
General Counsel and
Secretary 2001 315,000 100,000 -- -- -- 14,400
<Caption>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)
- ------------------ ------------
William R. Berkley............ 190,032(5)
Chairman of the Board and 163,821
Chief Executive Officer 140,576
James G. Shiel................ 78,559(5)
Senior Vice President -- 67,555
Investments 56,003
James W. McCleary............. 88,325(5)
Senior Vice President -- 70,150
Reinsurance Operations; 33,813
President, Facultative
ReSources, Inc.
Eugene G. Ballard............. 63,124(5)
Senior Vice President -- 45,497
Chief Financial Officer and
Treasurer 28,984
Ira S. Lederman............... 69,226(5)
Senior Vice President -- 51,511
General Counsel and
Secretary 45,200
</Table>
- ---------------
(1) Represents the market value of the common stock underlying restricted stock
units (RSUs) granted on April 4, 2003 using the closing price per share on
the grant date ($42.60, or, as adjusted for the stock split effected on
August 27, 2003, $28.40). As of December 31, 2003, Messrs. Berkley, Shiel,
McCleary, Ballard and Lederman held 202,500, 11,250, 11,250, 15,000 and
15,000 RSUs, respectively, and the underlying shares of common stock with
respect to such RSUs had a year-end value of $7,077,375, $393,188, $393,188,
$524,250 and $524,250, respectively.
(2) These amounts reflect the 3-for-2 common stock splits effected on August 27,
2003 and July 2, 2002.
(3) Of this amount, $200,000 represents consulting fees paid by Berkley
International, LLC and $68,110 represents personal use of Company and
chartered aircraft.
(4) Paid in February 2004. The units awarded in 2001 became fully vested and
payable as of December 31, 2003 after reaching the maximum unit value on an
accelerated basis due to the Company significantly exceeding its expected
performance during the relevant three-year period.
(5) For Messrs. Berkley, Shiel, Ballard and Lederman, these amounts include
contributions to the Profit Sharing Plan of $22,000 each, and premiums for
term life insurance of $2,232 each and for Mr. McCleary, this amount
includes a contribution to the Profit Sharing Plan of $20,000 and premiums
for term life insurance of $2,142. For Messrs. Berkley, Shiel, McCleary,
Ballard and Lederman, these amounts also include Benefit Replacement Plan
contributions of $88,000, $22,533, $19,900, $15,375 and $20,320,
respectively, and interest on deferred compensation of $38,819, $31,794,
$37,283, $23,517 and $24,674, respectively. For Mr. Berkley, this amount
also includes $31,500 of Company director fees and $7,481, representing the
value of 237 shares of common stock awarded to directors, and for Mr.
McCleary, this amount also includes an automobile allowance of $9,000.
(6) Of this amount, $200,000 represents consulting fees paid by Berkley
International, LLC and $69,140 represents personal use of Company and
chartered aircraft.
(7) Of this amount, $200,000 represents consulting fees paid by Berkley
International, LLC and $57,385 represents personal use of Company and
chartered aircraft.
(8) Mr. McCleary's term as an executive officer commenced in August 2001 and his
compensation includes amounts received as President of Facultative
ReSources, Inc.
16
The following table shows for the fiscal year ended December 31, 2003
information concerning the exercise of options and the number and value of
unexercised options for the executive officers named in the Summary Compensation
Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
12/31/03(#) 12/31/03($)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#)(1) VALUE REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(1)
- ---- ------------------ ----------------- ----------------- -----------------
William R. Berkley......... 129,375 3,211,875 1,957,500/ 39,294,450/
1,220,625 18,280,856
James G. Shiel............. 18,563 411,171 52,312/ 928,633/
60,751 1,057,052
James W. McCleary.......... -- -- 50,906/ 1,044,873
60,469 1,003,381
Eugene G. Ballard.......... -- -- 19,687/ 516,333/
70,313 1,320,117
Ira S. Lederman............ -- -- 48,573/ 910,789/
61,876 1,023,374
</Table>
- ---------------
(1) These amounts reflect the 3-for-2 common stock split effected on August 27,
2003.
17
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our common stock that may be
issued upon the exercise of options, warrants and rights under our existing
equity compensation plans and arrangements as of December 31, 2003. These plans
include the W. R. Berkley Corporation 2003 Stock Incentive Plan, the W. R.
Berkley Corporation 1997 Long-Term Incentive Compensation Plan and the Amended
and Restated W. R. Berkley Corporation 1997 Directors Stock Plan. The table also
includes information regarding restricted stock units ("RSUs") awarded to
officers of the Company and its subsidiaries on April 4, 2003.
<Table>
<Caption>
(C) NUMBER OF
(A) NUMBER OF SECURITIES REMAINING
SECURITIES TO BE (B) WEIGHTED-AVERAGE AVAILABLE FOR FUTURE
ISSUED UPON EXERCISE PRICE OF ISSUANCE UNDER EQUITY
EXERCISE OF OUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
OPTIONS, WARRANTS WARRANTS AND REFLECTED IN
PLAN CATEGORY AND RIGHTS(1) RIGHTS(1) COLUMN (A))(1)
- ------------- ----------------- -------------------- ------------------------
Equity compensation plans
approved by stockholders..... 8,477,821 $17.53 3,672,318
Equity compensation plans not
approved by stockholders..... 450,000(2) -- --
--------- ------ ---------
Total.......................... 8,927,821 $16.65 3,672,318
========= ====== =========
</Table>
- ------------------------------
(1) These amounts reflect the 3-for-2 common stock split effected on August 27,
2003.
(2) On April 4, 2003 the Company granted an aggregate of 450,000 restricted
stock units ("RSUs") (on a split adjusted basis) to certain officers of the
Company and its subsidiaries. Each RSU represents the right to receive one
share of common stock, subject to vesting requirements and continued
employment, following the recipient's termination of employment with the
Company and its subsidiaries. Delivery of shares of common stock to the RSU
recipients in satisfaction of the settlement of RSUs will be satisfied
exclusively from treasury shares held by the Company. The RSUs held by any
recipient will vest in full in one installment on April 4, 2008 (the
"Vesting Date"), provided the recipient remains employed with the Company
and/or its subsidiaries on the Vesting Date. If a recipient terminates
employment prior to the Vesting Date on account of death, disability or
retirement, a pro rata share of the number of RSUs granted to the recipient
shall vest and be distributed to the recipient as of such termination date.
Upon termination of employment for any other reason prior to vesting, all
RSUs held by the recipient will expire and be forfeited. In the event of a
Change of Control of the Company (as defined in the RSU Agreements) all RSUs
will vest in full and the shares of common stock underlying each RSU will be
delivered to the RSU recipients. The Compensation and Stock Option Committee
of the Board retains the right to accelerate the vesting of any or all RSUs
at any time, for any reason. The following list sets forth the names of the
executive officers of the Company who received RSUs and the number of RSUs
each individual received (on a split adjusted basis): William R. Berkley -
202,500; William R. Berkley, Jr. - 15,000; Eugene G. Ballard - 15,000;
Robert P. Cole - 11,250; Paul J. Hancock - 7,500; Robert C. Hewitt - 7,500;
Ira S. Lederman - 15,000; James W. McCleary - 11,250; Clement P. Patafio -
3,750; and James G. Shiel - 11,250; and an aggregate of 150,000 RSUs were
granted to 24 other officers of the Company and its subsidiaries.
18
COMPANY STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Company's
common stock for the last five fiscal years with the cumulative total return on
the Standard & Poor's (S&P) 500 Index and a Peer Group over the same period
(assuming the investment of $100 in each category on December 31, 1998 and the
reinvestment of all dividends). The Peer Group was selected based upon current
comparable industry criteria.
[Performance Chart]
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
- ----------------------------------------------------------------------------------------------------------------
W. R. Berkley Corporation $100 $ 63 $145 $167 $186 $248
S&P 500(R) $100 $121 $110 $ 97 $ 76 $ 97
Peer Group (11 Stocks) $100 $ 80 $125 $115 $ 99 $119
</Table>
The Peer Group consists of ACE Limited, The Chubb Corporation, Cincinnati
Financial Corp., CNA Financial Corp., Everest Re Group, Ltd., HCC Insurance
Holdings, Inc., Markel Corp., The Ohio Casualty Corporation, SAFECO Corp., The
St. Paul Companies, Inc. and XL Capital Ltd.
Copyright(C) 2004, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved.
19
APPROVAL OF THE W. R. BERKLEY CORPORATION
2004 LONG-TERM INCENTIVE PLAN
The Board submits to the stockholders for approval the W. R. Berkley
Corporation 2004 Long-Term Incentive Plan (the "LTIP"). The Board believes that
it is in the best interest of the Company and the stockholders to adopt the
LTIP. The LTIP is a cash-based plan that does not provide for the payment of any
equity compensation. It is designed to encourage teamwork among certain key
employees of the Company and its subsidiaries and affiliates to foster the
achievement of the Company's long-term goals, to reward these employees with pay
that relates to the Company's performance and to provide a means through which
the Company may attract, motivate and retain talented individuals who can assist
the Company in achieving its long-term goals. Compensation payable under the
LTIP is based on long-term corporate performance and is tied to an increase in
stockholder value.
The LTIP is designed so that all compensation payable thereunder will be
fully deductible by the Company under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Section 162(m)"), and is being submitted to the
stockholders for the sole purpose of complying with the shareholder approval
requirements of Section 162(m). If the LTIP is not approved by the stockholders,
the LTIP will expire and all awards under the LTIP will become void.
The following summary of the material features of the LTIP is qualified in
its entirety by the terms of the LTIP as filed with the Securities and Exchange
Commission.
TERM OF THE LTIP
Provided the stockholders approve the LTIP and unless earlier terminated,
the LTIP has a 5-year term and will terminate on December 31, 2008. After the
LTIP is terminated, no awards may be granted but awards previously granted shall
remain outstanding in accordance with their applicable terms and conditions and
subject to the completion of the applicable performance period. Because
performance periods may last up to five (5) years, awards granted under the LTIP
in the last year of the term may accrue value through December 31, 2013.
ADMINISTRATION
The LTIP will be administered by a committee appointed by the Board of
Directors. The Compensation and Stock Option Committee has been appointed to
administer the LTIP (the administrator of the LTIP is hereafter referred to as
the "Committee"). The Board of Directors may from time to time, in its
discretion, change the members of the Committee and/or appoint new members. The
Committee may, in certain circumstances, delegate its authority and
administrative duties under the LTIP to one or more of its members or to one or
more officers of the Company or its subsidiaries or affiliates.
The Committee has full and exclusive discretionary power to administer the
LTIP, including interpreting the terms and the intent of the LTIP and any award
agreement or other agreement thereunder, selecting award recipients, granting
awards, establishing all terms and conditions for awards and making all other
determinations it deems necessary or proper for the administration of the LTIP.
20
ELIGIBILITY
Participation in the LTIP will be limited to key employees of the Company
and its subsidiaries and affiliates designated by the Committee. There are
approximately 275 key employees currently eligible for participation in the
LTIP.
PERFORMANCE UNITS
The LTIP allows for the award of performance units ("Units") to key
employees in such amounts and upon such terms as determined by the Committee.
The Units are intended to provide value to the recipients based on the
attainment of certain performance goals set by the Committee over the course of
a specified performance period. Performance periods must be greater than one
year but no more than five years. The realization of value may, in addition, be
conditioned on certain vesting and continued employment conditions. At the end
of the performance period, or earlier upon specified trigger events, the award
recipients will receive a cash payment based on the degree of attainment of the
performance goals and other vesting conditions. The Committee also has the
authority to provide for accelerated vesting of any award based on the early
achievement of performance goals. The maximum aggregate amount awarded or
credited with respect to awards to any employee covered by Section 162(m) (a
"Covered Employee") in any one year during a performance period may not exceed
ten million dollars ($10,000,000) ("Annual Award Limit"), plus the amount of the
Covered Employee's unused applicable Annual Award Limit as of the close of the
previous year. Except as otherwise provided in an award agreement or as
otherwise determined at any time by the Committee, Units may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than to a designated beneficiary upon a participant's death, by will or by the
laws of descent and distribution.
PERFORMANCE MEASURES
The performance goals, upon which the payment or vesting of any award to
any Covered Employee is contingent, are limited to the following performance
measures: net income; net income per share; aggregate or per share book value or
adjusted book value; written premiums (net or gross); return measures
(including, but not limited to, return on assets, capital, invested capital,
equity, sales, or premiums); cash flow (including, but not limited to, operating
cash flow, free cash flow, and cash flow return on capital); combined ratios (an
insurance industry measure of underwriting profitability, not including
investment income); EVA(R) (economic value added); share price (including, but
not limited to, growth measures and total shareholder return); and increase in
or maintenance of the Company's market share. The Committee may base performance
goals on other performance measures not listed above for awards granted to
individuals other than Covered Employees.
Any one or more of these performance measure(s) may be used to measure the
performance of the Company, a subsidiary, and/or affiliate as a whole, or any
business unit of the Company, subsidiary, and/or affiliate, or any combination
thereof, or by comparison with the performance of one or more comparison
companies or business units, or any published or special index that the
Committee deems appropriate.
The Committee may provide in any award that any evaluation of the
attainment of performance goals may include or exclude any of the following
events that occur during a performance period: asset write-downs; litigation or
claim judgments or settlements; the effect of changes in tax laws, accounting
principles, or other laws or provisions affecting reported results; any
reorganization and restructuring
21
programs; extraordinary nonrecurring items as described in Accounting Principles
Board Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
shareholders for the applicable year; acquisitions or divestitures; foreign
exchange gains and losses; and any stock repurchase programs.
DEFERRALS
The Committee may permit or require an award holder to defer the receipt of
the payment of cash that would otherwise be due to such holder by virtue of the
satisfaction of any requirements or performance goals with respect to any
awards, subject to such rules and procedures the Committee may establish for the
purpose of permitting or requiring such deferrals.
CHANGE OF CONTROL
The Committee may prescribe certain consequences for an award upon the
occurrence of a Change of Control (as defined in the LTIP), such as funding the
award through a rabbi trust or acceleration and payment of the award, and may
set forth such consequences in the award agreement.
TERMINATION AND AMENDMENT
The Committee may, at any time and from time to time, alter, amend, modify,
suspend, or terminate the LTIP in whole or in part; provided, however, that no
amendment of the LTIP shall be made without stockholder approval if stockholder
approval is required by law, regulation, or stock exchange rule.
NEW PLAN BENEFITS
Because the award of Units is within the discretion of the Committee, the
Company cannot determine the number and value of Units to be granted in the
future. Further, the Units are cash-based, not equity-based. The following table
sets forth the number of Units granted to the Chief Executive Officer and the
four other highest paid executive officers of the Company individually, all
executive officers as a group and all employees who are not executive officers
as a group, in each case, as of the date of this proxy statement. These Units
were granted subject to stockholder approval of the LTIP.
<Table>
<Caption>
DOLLAR NUMBER
NAME AND POSITION VALUE(1) OF UNITS
- ----------------- -------- --------
William R. Berkley.......................................... N/A 40,000
James G. Shiel.............................................. N/A 2,500
James W. McCleary........................................... N/A 2,500
Eugene G. Ballard........................................... N/A 3,000
Ira S. Lederman............................................. N/A 3,000
All executive officers as a group........................... N/A 62,500
All employees who are not executive officers as a group..... N/A 37,500
</Table>
- ------------------------------
(1) The dollar value of Units granted in 2004 is not presently determinable
because the value is based on the future attainment of certain performance
goals. If the LTIP had been in effect in 2003 and these Units had been
granted or outstanding in 2003, then based on the achievement of the 2004
performance goals applied to actual performance in 2003, the assumed dollar
value of each Unit
22
for fiscal 2003 would have been $42.11. Based on this number, the assumed
aggregate 2003 value of Units granted to Messrs. Berkley, Shiel, McCleary,
Ballard and Lederman would have been $1,684,400, $105,275, $105,275,
$126,330 and $126,330, respectively; the assumed 2003 value of Units granted
to all executive officers as a group would have been $2,631,875; and the
assumed 2003 value of Units granted to all employees who are not executive
officers as a group would have been $1,579,125. The Units granted in 2004
are subject to a five (5) year performance period and are also subject to
certain continued employment conditions, and the cumulative Unit values over
the course of the performance period will be payable only at the end of such
performance period, or earlier upon certain trigger events, and only to the
extent such continued employment conditions are satisfied.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE W. R. BERKLEY CORPORATION 2004 LONG-TERM INCENTIVE PLAN.
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has unanimously voted to recommend that the
stockholders adopt an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock from
150,000,000 shares to 300,000,000 shares. If the amendment is approved, the
shares may be issued from time to time by the Board of Directors. It is not
expected that further authorization from stockholders will be solicited for the
issuance of any shares of common stock, except to the extent such authorization
is required by law or by the rules of the New York Stock Exchange. Currently,
there is no agreement, arrangement or understanding relating to the issuance and
sale of the additional shares of common stock which would be authorized by the
proposed amendment. Stockholders do not have, and the proposed amendment would
not create, any preemptive rights.
The Company currently has 150,000,000 shares of common stock authorized. At
December 31, 2003, there were 83,537,740 shares issued and outstanding, and
20,964,520 shares held in treasury. The Board believes it is desirable for the
Company to have a sufficient number of shares of common stock available, as the
occasion may arise, for possible future financings or acquisition transactions,
stock dividends or splits (such as the 3-for-2 stock splits effected in each of
2002 and 2003), stock issuances pursuant to employee benefit plans and other
proper corporate purposes. Having such additional shares available for issuance
in the future would give the Company greater flexibility by allowing shares to
be issued without incurring the delay and expense of a special stockholders'
meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE RESTATED CERTIFICATE OF INCORPORATION.
APPOINTMENT OF INDEPENDENT AUDITORS
KPMG LLP has been appointed by the Board as independent certified public
accountants to audit the financial statements of the Company for the fiscal year
ending December 31, 2004. The appointment of this firm was recommended to the
Board by the Audit Committee. The Board is submitting this matter to a vote of
stockholders in order to ascertain their views. If the appointment of KPMG is
not ratified, the Board will reconsider its action and will appoint auditors for
the 2004 fiscal
23
year without further stockholder action. Further, even if the appointment is
ratified by stockholder action, the Board may at any time in the future in its
discretion reconsider the appointment without submitting the matter to a vote of
stockholders.
It is expected that representatives of KPMG will attend the Annual Meeting,
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate stockholder questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG.
AUDIT AND NON-AUDIT FEES
The aggregate amount of the fees billed or expected to be billed by KPMG
for its professional services in 2003 and 2002 were as follows:
<Table>
<Caption>
TYPE OF FEES 2003($) 2002($)
- ------------ --------- ---------
Audit Fees(1)............................................... 2,289,750 1,964,400
Audit-Related Fees(2)....................................... 40,000 29,750
Tax Fees(3)................................................. 68,250 85,025
All Other Fees.............................................. -- --
Total Fees.................................................. 2,398,000 2,079,175
</Table>
- ------------------------------
(1) Audit fees consist of fees the Company paid to KPMG for professional
services for the audit of the Company's consolidated financial statements
included in its Form 10-K and review of financial statements included in its
Forms 10-Q, or for services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements and public
offerings of securities.
(2) Fees associated with the audit of health and benefit plans.
(3) Tax fees consist of fees for tax consultations and tax compliance services.
PRE-APPROVAL POLICIES
Consistent with SEC policies regarding auditor independence, the Audit
Committee has adopted a policy regarding the pre-approval of services of the
Company's independent auditors. Pursuant to this policy, such services may be
generally pre-approved on an annual basis; other services, or services exceeding
the pre-approved cost levels, must be specifically pre-approved by the Audit
Committee. The Audit Committee may also delegate pre-approval authority to one
or more of its members. All of such fees for 2003 were approved by the Audit
Committee in accordance with this policy.
24
AUDIT COMMITTEE REPORT
To the Board of Directors of W. R. Berkley Corporation:
The Audit Committee of the Board of Directors met with management and the
independent accountants, KPMG LLP, to review and discuss the December 31, 2003
financial statements. The Audit Committee also discussed with the independent
accountants the matters required by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee also received written
disclosures from the independent accountants required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), and the
Audit Committee discussed with the independent accountants that firm's
independence.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003, to be filed with the Securities and Exchange Commission.
Audit Committee
Mark L. Shapiro, Chairman
Ronald E. Blaylock
Philip J. Ablove
March 31, 2004
The above report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
OTHER MATTERS TO COME BEFORE THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than as set forth above. However, since matters of which management is not
now aware may come before the Annual Meeting or any adjournment thereof, the
proxies intend to vote, act and consent in accordance with their best judgment
with respect thereto. Upon receipt of such proxies (in the form enclosed and
properly signed) in time for voting, the shares represented thereby will be
voted as indicated therein and in this proxy statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the copies of Forms 3, 4 and 5 received by
it, or written representations from certain reporting persons that no Forms 5
were required for such persons, the Company believes that all filing
requirements under Section 16(a) of the Exchange Act applicable to its officers,
directors and ten-percent stockholders were complied with during the fiscal year
ended December 31, 2003, except that Jack H. Nusbaum, a director of the Company,
did not file a timely Form 4 with respect to the sale of 3,000 shares of the
Company's common stock in January 2002 by a trust of which he served as
co-trustee, and Robert W. Gosselink, Senior Vice President, Insurance
25
Risk Management of the Company, did not file a timely Form 4 with respect 7,500
options granted to him in November 2003. Both of the foregoing filings have
since been made.
STOCKHOLDER NOMINATIONS FOR BOARD MEMBERSHIP
AND OTHER PROPOSALS FOR 2005 ANNUAL MEETING
It is anticipated that the next Annual Meeting of Stockholders after the
one scheduled for May 11, 2004 will be held on or about May 10, 2005. The
Company's By-Laws require that, for nominations of directors or other business
to be properly brought before an Annual Meeting of Stockholders, written notice
of such nomination or proposal for other business must be furnished to the
Company. Such notice must contain certain information concerning the nominating
or proposing stockholder and information concerning the nominee and must be
furnished by the stockholder (who must be entitled to vote at the meeting) to
the Secretary of the Company, in the case of the Annual Meeting of Stockholders
to be held in 2005 no earlier than February 9, 2005 and no later than March 11,
2005. A copy of the applicable provisions of the By-Laws may be obtained by any
stockholder, without charge, upon written request to the Secretary of the
Company at the address set forth below.
Since the Company did not receive timely notice of any stockholder proposal
for the 2004 Annual Meeting, it will have discretionary authority to vote on any
stockholder proposals presented at such meeting.
In addition to the foregoing, and in accordance with the rules of the
Securities and Exchange Commission, in order for a stockholder proposal,
relating to a proper subject, to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the Annual Meeting of Stockholders
to be held in 2005, such proposal must be received by the Secretary of the
Company by December 13, 2004 in the form required under and subject to the other
requirements of the applicable rules of the Securities and Exchange Commission.
Any such proposal should be submitted by certified mail, return receipt
requested, or other means, including electronic means, that allow the
stockholder to prove the date of delivery.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2003 IS AVAILABLE WITHOUT CHARGE TO ANY STOCKHOLDER OF THE
COMPANY WHO REQUESTS A COPY IN WRITING. REQUESTS FOR COPIES OF THIS REPORT
SHOULD BE DIRECTED TO THE SECRETARY, W. R. BERKLEY CORPORATION, 475 STEAMBOAT
ROAD, GREENWICH, CONNECTICUT 06830.
By Order of the Board of Directors,
WILLIAM R. BERKLEY
Chairman of the Board and
Chief Executive Officer
26
ANNEX A
W. R. BERKLEY CORPORATION
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee is appointed by the Board to assist the Board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
independent auditor's qualifications and independence, (3) the performance of
the Company's internal audit function and independent auditors, and (4) the
compliance by the Company with legal and regulatory requirements.
The Audit Committee shall prepare the report required by the rules of the
Securities and Exchange Commission (the "Commission") to be included in the
Company's annual proxy statement.
COMMITTEE MEMBERSHIP
The Audit Committee shall consist of no fewer than three members. The
members of the Audit Committee shall meet the independence and experience
requirements of the New York Stock Exchange, Section 10A(m)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Commission. At least one member of the Audit Committee shall be an audit
committee financial expert as defined by the Commission. Audit Committee members
shall not simultaneously serve on the audit committees of more than two public
companies.
The members of the Audit Committee shall be appointed by the Board. Audit
Committee members may be replaced by the Board.
MEETINGS
The Audit Committee shall meet as often as it determines, but not less
frequently than quarterly. The Audit Committee shall meet periodically with
management, the internal auditors and the independent auditor in separate
executive sessions. The Audit Committee may request any officer or employee of
the Company or the Company's outside counsel or independent auditor to attend a
meeting of the Committee or to meet with any members of, or consultants to, the
Committee.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Audit Committee shall have the sole authority to appoint or replace the
independent auditor (subject, if applicable, to shareholder ratification). The
Audit Committee shall be directly responsible for the compensation and oversight
of the work of the independent auditor (including resolution of disagreements
between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit or related work. The
independent auditor shall report directly to the Audit Committee.
The Audit Committee shall pre-approve all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the Company by its independent auditor, subject to the de minimus exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which
are approved by the Audit Committee prior to the completion of the audit.
A-1
The Audit Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to
grant pre-approvals of audit and permitted non-audit services, provided that the
decisions of such subcommittee to grant pre-approvals shall be presented to the
full Audit Committee at its next scheduled meeting.
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding, as determined by
the Audit Committee, for payment of compensation to the independent auditor for
the purpose of rendering or issuing an audit report and to any advisors employed
by the Audit Committee.
The Audit Committee shall make regular reports to the Board. It shall
review with the full board any issues that arise with respect to the quality or
integrity of the Company's financial statements, the Company's compliance with
legal or regulatory requirements, the performance and independence of the
Company's independent auditors, or the performance of the internal audit
function. The Audit Committee shall review and reassess the adequacy of this
Charter annually and recommend any proposed changes to the Board for approval.
The Audit Committee shall review its own performance annually and confirm to the
Board that all responsibilities outlined in the charter have been carried out.
The Audit Committee, to the extent it deems necessary or appropriate,
shall:
FINANCIAL STATEMENT AND DISCLOSURE MATTERS
1. Review and discuss with management and the independent auditor the
annual audited financial statements, including disclosures made in management's
discussion and analysis, and recommend to the Board whether the audited
financial statements should be included in the Company's Form 10-K.
2. Review and discuss with management and the independent auditor the
Company's quarterly financial statements prior to the filing of its Form 10-Q,
including Management Discussion and Analysis and the results of the independent
auditor's reviews of the quarterly financial statements.
3. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the preparation
of the Company's financial statements, including any significant changes in the
Company's selection or application of accounting principles, discussions with
the national office of the independent auditor, any major issues as to the
adequacy of the Company's internal controls and any special steps adopted in
light of material control deficiencies.
4. Review and discuss quarterly reports from the independent auditors on:
(a) All critical accounting policies and practices to be used.
(b) All alternative treatments of financial information within
generally accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent auditor.
(c) Other material written communications between the independent
auditor and management, such as any management letter or schedule of
unadjusted differences.
A-2
5. Discuss with management the Company's earnings press releases, including
the use of "pro forma" or "adjusted" non-GAAP information, as well as financial
information and earnings guidance provided to analysts and rating agencies. Such
discussion may be done generally (consisting of discussing the types of
information to be disclosed and the types of presentations to be made).
6. Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives as well as off-balance sheet structures on
the Company's financial statements.
7. Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures, including
the Company's risk assessment and risk management policies.
8. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit, including any difficulties encountered in the course of the audit
work, including any restrictions on the scope of activities or access to
requested information, and any significant disagreements with management.
9. Review disclosures made to the Audit Committee by the Company's CEO and
CFO during their certification process for the Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company's internal controls.
OVERSIGHT OF THE COMPANY'S RELATIONSHIP WITH THE INDEPENDENT AUDITOR
1. Review and evaluate the lead partner of the independent auditor team.
2. Obtain and review a report from the independent auditor at least
annually regarding (a) the independent auditor's internal quality-control
procedures, (b) material issues raised by internal-control reviews, peer reviews
or governmental or professional investigations of the firm, or by any inquiry or
investigation by governmental or professional authorities within the preceding
five years respecting one or more audits carried out by the firm, (c) any steps
taken to deal with such issues, and (d) all relationships between the
independent auditor and the Company. Evaluate the qualifications, performance
and independence of the independent auditor, including considering whether the
provision of permitted non-audit services is compatible with maintaining the
auditor's independence, and taking into account the opinions of management and
internal auditors. The Audit Committee shall present its conclusions with
respect to the independent auditor to the Board.
3. Ensure the rotation of the lead audit partner having primary
responsibility for the audit and the audit partner responsible for reviewing the
audit as required by law.
4. Recommend to the Board policies for the Company's hiring of employees or
former employees of the independent auditor who participated in any capacity in
the audit of the Company.
5. Meet with the independent auditor prior to the audit to discuss the
planning and staffing of the audit.
A-3
OVERSIGHT OF THE COMPANY'S INTERNAL AUDIT FUNCTION
1. Ensure the Company maintains an internal audit function to provide
management and the committee with ongoing assessments of the Company's risk
management process and systems of internal control.
2. Review the appointment and replacement of the senior internal auditing
executive.
3. Review the significant reports to management prepared by the internal
auditing department and management's responses.
4. Discuss with the independent auditor and management the internal audit
department responsibilities, budget and staffing and any recommended changes in
the planned scope of the internal audit.
COMPLIANCE OVERSIGHT RESPONSIBILITIES
1. Obtain from the independent auditor assurance that Section 10A(b) of the
Exchange Act has not been implicated.
2. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company and its
subsidiary/foreign affiliated entities are in conformity with applicable laws
and regulations. Advise the Board with respect to the Company's policies and
procedures regarding compliance with applicable laws and regulations.
3. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
4. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any employee complaints or
published reports which raise material issues regarding the Company's financial
statements or accounting policies.
5. Discuss with the Company's General Counsel legal matters that may have a
material impact on the financial statements or the Company's compliance
policies.
LIMITATION OF AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditor.
AS AMENDED MARCH 9, 2004
A-4
ANNEX B
2004 Long-Term Incentive Plan
W. R. Berkley Corporation
EFFECTIVE JANUARY 1, 2004
B-1
Contents
<Table>
Article 1. Establishment, Purpose, and Duration........................ B-3
Article 2. Definitions................................................. B-3
Article 3. Administration.............................................. B-5
Article 4. Annual Award Limit.......................................... B-5
Article 5. Eligibility and Participation............................... B-6
Article 6. Performance Units........................................... B-6
Article 7. Performance Measures........................................ B-7
Article 8. Beneficiary Designation..................................... B-8
Article 9. Deferrals................................................... B-8
Article 10. Rights of Participants...................................... B-8
Article 11. Change of Control........................................... B-9
Article 12. Amendment, Modification, Suspension, and Termination........ B-9
Article 13. Withholding................................................. B-9
Article 14. Successors.................................................. B-9
Article 15. General Provisions.......................................... B-10
</Table>
B-2
W. R. Berkley Corporation
2004 Long-Term Incentive Plan
Article 1.
Establishment, Purpose, and Duration
1.1 Establishment. W. R. Berkley Corporation, a Delaware corporation
(hereinafter referred to as the "Company"), establishes a long-term incentive
plan to be known as the W. R. Berkley Corporation 2004 Long-Term Incentive Plan
(hereinafter referred to as the "Plan"), as set forth in this document.
The Plan permits the grant of Performance Units whose payout in cash
depends on the long-term performance of the Company and/or Participants during a
Performance Period.
The Plan shall become effective on January 1, 2004 (the "Effective Date")
subject to approval by the Company's shareholders at its annual meeting to be
held on May 11, 2004. The Plan, if so approved, shall remain in effect as
provided in Section 1.3 hereof. If not so approved, the Plan and any Awards
granted under the Plan shall be null and void, ab initio.
1.2 Purpose of the Plan. The primary purposes of the Plan are to: (a)
encourage teamwork among Participants to help achieve the Company's long-term
goals; (b) reward performance with pay that varies in relation to the Company's
and/or Participant's performance; and (c) provide a means through which the
Company may attract, motivate, and retain individuals who can assist the Company
in achieving its long-term goals. The Company intends that compensation payable
under the Plan will qualify for deduction under Code Section 162(m).
1.3 Duration of the Plan. Unless sooner terminated as provided herein, the
Plan shall terminate five (5) years from the Effective Date. After the Plan is
terminated, no Awards may be granted but Awards previously granted shall remain
outstanding in accordance with their applicable terms and conditions and the
Plan's terms and conditions.
ARTICLE 2.
Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.
2.1 "Affiliate" shall mean an "Affiliate" of the Company as such term is
defined in Rule 12b-2 of the General Rules and Regulations of the
Exchange Act.
2.2 "Annual Award Limit" has the meaning set forth in Article 4.
2.3 "Award" means a grant of one or more Performance Units under Article 6.
2.4 "Award Agreement" means either (i) a written agreement entered into by
the Company and a Participant setting forth the terms and provisions
applicable to an Award granted under this Plan, or (ii) a written
statement issued by the Company to a Participant describing the terms
and provisions of such Award.
B-3
2.5 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.6 "Change of Control" shall have the meaning ascribed thereto in the
Company's 2003 Stock Incentive Plan.
2.7 "Code" means the U.S. Internal Revenue Code of 1986, as amended from
time to time.
2.8 "Committee" means the Compensation and Stock Option Committee of the
Board, or any other committee designated by the Board to administer
this Plan. The members of the Committee shall be appointed from time to
time by and shall serve at the discretion of the Board and when
determining Awards intended to be Performance-Based Compensation for
Covered Employees and making other determinations with respect to such
Awards for Covered Employees hereunder shall be "outside directors"
within the meaning of Code Section 162(m) and the regulations
promulgated thereunder, or any successor statute.
2.9 "Company" means W. R. Berkley Corporation, a Delaware corporation, and
any successor thereto as provided in Article 14 herein.
2.10 "Covered Employee" means a Participant who is a "covered employee," as
defined in Code Section 162(m) and the regulations promulgated under
Code Section 162(m), or any successor statute.
2.11 "Director" means any individual who is a member of the Board.
2.12 "Effective Date" has the meaning set forth in Section 1.1.
2.13 "Employee" means any employee of the Company, an Affiliate, and/or
Subsidiary.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.15 "Insider" shall mean an individual who has been determined by the
Company to be an "insider" for purposes of Section 16 of the Exchange
Act.
2.16 "Participant" means any eligible person as set forth in Article 5 to
whom an Award is granted.
2.17 "Performance-Based Compensation" means compensation under an Award
that satisfies the requirements of Section 162(m) of the Code for
deductibility of remuneration paid to Covered Employees.
2.18 "Performance Measures" means measures as described in Article 7 on
which the performance goals are based and which are approved by the
Company's shareholders pursuant to this Plan in order to qualify
Awards as Performance-Based Compensation.
2.19 "Performance Period" means the period of time, which must be greater
than a Plan Year but no longer than five years, during which the
performance goals must be met in order to determine the degree of
payout and/or vesting with respect to an Award.
2.20 "Performance Unit" means an Award granted to a Participant, as
described in Article 6.
2.21 "Plan" means the W. R. Berkley Corporation 2004 Long-Term Incentive
Plan.
B-4
2.22 "Plan Year" means the Company's fiscal year.
2.23 "Subsidiary" means any corporation or other entity, whether domestic
or foreign, in which the Company has or obtains, directly or
indirectly, a proprietary interest of more than fifty percent (50%) by
reason of stock ownership or otherwise.
Article 3.
Administration
3.1 General. The Committee shall be responsible for administering the
Plan, subject to this Article 3 and the other provisions of the Plan. The
Committee may employ attorneys, consultants, accountants, agents, and other
persons, any of whom may be an Employee, and the Committee, the Company, and its
officers and Directors shall be entitled to rely upon the advice, opinions, or
valuations of any such persons. 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 all actions
taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Participants, the Company, and all other interested
persons.
3.2 Authority of the Committee. The Committee shall have full and
exclusive discretionary power to interpret the terms and the intent of the Plan
and any Award Agreement or other agreement or document ancillary to or in
connection with the Plan, to determine eligibility for Awards and to adopt such
rules, regulations, forms, instruments, and guidelines for administering the
Plan as the Committee may deem necessary or proper. Such authority shall
include, but not be limited to, selecting Award recipients, granting Awards,
establishing all Award terms and conditions, including the number of Performance
Units subject to each Award and/or the amount and value and/or maximum value for
each Award, as applicable, and such other terms and conditions as set forth in
Award Agreements, and, subject to Article 12, adopting modifications and
amendments to the Plan or any Award Agreement, including without limitation, any
that are necessary to comply with the laws of the countries and other
jurisdictions in which the Company, an Affiliate, and/or a Subsidiary operate.
3.3 Delegation. The Committee may delegate to one or more of its members
or to one or more officers of the Company, and/or a Subsidiary or an Affiliate
or to one or more agents or advisors such administrative duties or powers as it
may deem advisable, and the Committee or any person to whom it has delegated
duties or powers as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have under
the Plan. The Committee may, by resolution, authorize one or more officers of
the Company to do one or both of the following on the same basis as can the
Committee: (a) designate Employees to be recipients of Awards; and (b) determine
the size of any such Awards; provided, however, (i) the Committee shall not
delegate such responsibilities to any such officer for Awards granted to an
Employee that is considered an Insider and/or a Covered Employee; (ii) the
resolution providing such authorization sets forth the total number of Awards
such officer(s) may grant; and (iii) the officer(s) shall report periodically to
the Committee regarding the nature and scope of the Awards granted pursuant to
the authority delegated.
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Article 4.
Annual Award Limit
Unless and until the Committee determines that an Award to a Covered
Employee shall not be designed to qualify as Performance-Based Compensation, the
maximum aggregate amount awarded or credited with respect to Awards to any one
Covered Employee in any one Plan Year may not exceed ten million dollars
($10,000,000) ("Annual Award Limit"), plus the amount of the Covered Employee's
unused applicable Annual Award Limit as of the close of the previous Plan Year.
Article 5.
Eligibility and Participation
5.1 Eligibility. Individuals eligible to participate in this Plan include
all Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all Employees, those to whom
Awards shall be granted. Only those Employees selected by the Committee to
receive an Award shall be granted an Award and become a Participant.
Article 6.
Performance Units
6.1 Grant of Performance Units. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Performance
Units to Participants in such amounts and upon such terms as the Committee shall
determine.
6.2 Value of Performance Units. Each Performance Unit shall have an
initial value, which may be zero, that is established by the Committee at the
time of grant. The Committee shall set performance goals for a Performance
Period in its discretion which, depending on the extent to which they are met,
will determine the value of Performance Units that will be paid out to the
Participant.
6.3 Earning of Performance Units. Subject to the terms of this Plan, after
the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the value and number of Performance Units
earned by the Participant over the Performance Period, to be determined as a
function of the extent to which the corresponding performance goals have been
achieved and may also be based on a Participant's continued employment.
6.4 Form and Timing of Payment of Performance Units. Payment of earned
Performance Units shall be as determined by the Committee and as evidenced in
the Award Agreement. Subject to the terms of the Plan, earned Performance Units
shall be paid in cash equal to the value of the earned Performance Units as soon
as practicable after the end of the Performance Period or as otherwise set forth
in the Award Agreement.
6.5 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Performance
Units, the extent to which such Performance Units shall be forfeited and the
extent to which the value of any Performance Units will be paid out in
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cash to the Participant at or following termination of the Participant's
employment with the Company, and all Affiliates and Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Awards of Performance Units issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination.
6.6 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement or otherwise determined at any time by the Committee,
Performance Units may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than to a designated beneficiary upon death, by
will or by the laws of descent and distribution.
Article 7.
Performance Measures
7.1 Performance Measures. Unless and until the Committee proposes for
shareholder vote and the shareholders approve a change in the general
Performance Measures set forth in this Article 7, the performance goals upon
which the payment or vesting of an Award to a Covered Employee that is intended
to qualify as Performance-Based Compensation shall be limited to the following
Performance Measures:
(a) Net income;
(b) Net income per share;
(c) Aggregate or per share book value or adjusted book value;
(d) Written premiums (net or gross);
(e) Return measures (including, but not limited to, return on assets,
capital, invested capital, equity, sales, or premiums);
(f) Cash flow (including, but not limited to, operating cash flow, free
cash flow, and cash flow return on capital);
(g) Combined ratios;
(h) EVA(R);
(i) Share price (including, but not limited to, growth measures and total
shareholder return); and
(j) Increase in or maintenance of the Company's market share.
Any one or more Performance Measure(s) may be used to measure the
performance of the Company, Subsidiary, and/or Affiliate as a whole or any
business unit of the Company, Subsidiary, and/or Affiliate or any combination
thereof, or by comparison with the performance of one or more comparison
companies or business units, or published or special index that the Committee,
in its sole discretion, deems appropriate, or the Committee may select
Performance Measure (i) above as compared to various stock market indices. The
Committee also has the authority to provide for
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accelerated vesting of any Award based on the achievement of performance goals
pursuant to the Performance Measures specified in this Article 7.
The Committee may base performance goals on other Performance Measures not
listed above for Awards granted to individuals other than Covered Employees. The
Performance Measures for any particular Award shall be set forth in the
applicable Award Agreement as determined by the Committee and need not be
uniform among Participants.
7.2 Evaluation of Performance. The Committee may provide in any such Award
that any calculation of performance may include or exclude any of the following
events that occur during a Performance Period: (a) asset write-downs, (b)
litigation or claim judgments or settlements, (c) the effect of changes in tax
laws, accounting principles, or other laws or provisions affecting reported
results, (d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management's discussion and analysis of financial condition and
results of operations appearing in the Company's annual report to shareholders
for the applicable year, (f) acquisitions or divestitures, (g) foreign exchange
gains and losses and (h) any stock repurchase programs. To the extent such
inclusions or exclusions affect Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Code Section 162(m) for
deductibility.
7.3 Adjustment of Performance-Based Compensation. Awards that are designed
to qualify as Performance-Based Compensation, and that are held by Covered
Employees, may not be adjusted upward. The Committee shall retain the discretion
to adjust such Awards downward, either on a formula or discretionary basis or
any combination, as the Committee determines.
7.4 Committee Discretion. In the event that applicable tax and/or
securities laws change to permit Committee discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Code Section 162(m) and base vesting on Performance Measures
other than those set forth in Section 7.1.
Article 8.
Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, earned benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
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Article 9.
Deferrals
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash that would otherwise be due to such
Participant by virtue of the satisfaction of any requirements or performance
goals with respect to Awards. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
Article 10.
Rights of Participants
10.1 Employment. Nothing in the Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company, an Affiliate or Subsidiary to
terminate any Participant's employment any time or for any reason not prohibited
by law, nor confer upon any Participant any right to continue his or her
employment for any specified period of time.
Neither an Award hereunder nor the Plan nor any benefits arising under this
Plan shall constitute an employment contract between the Participant and the
Company, an Affiliate or Subsidiary and, accordingly, shall not restrict or
prohibit the Company, an Affiliate or Subsidiary from terminating such
Participant's employment at any time and for any reason.
10.2 Participation. No individual shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
Article 11.
Change of Control
Upon the occurrence of a Change of Control, unless otherwise specifically
prohibited under applicable laws or by the rules and regulations of any
governing governmental agencies or national securities exchanges, the treatment
of any outstanding Awards shall be governed by the provisions of the applicable
Award Agreements.
Article 12.
Amendment, Modification, Suspension, and Termination
12.1 Amendment, Modification, Suspension, and Termination. Subject to
Section 12.2, the Committee may, at any time and from time to time, alter,
amend, modify, suspend, or terminate the Plan and any Award Agreement in whole
or in part; provided, however, that no amendment of the Plan shall be made
without shareholder approval if shareholder approval is required by law,
regulation, or stock exchange rule.
12.2 Awards Previously Granted. Notwithstanding any other provision of the
Plan to the contrary but subject to Section 7.3 herein, no termination,
amendment, suspension, or modification of
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the Plan or an Award Agreement shall adversely affect in any material way any
Award previously granted under the Plan, without the written consent of the
Participant holding such Award.
Article 13.
Withholding
The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount necessary to satisfy
federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Plan.
Article 14.
Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 15.
General Provisions
15.1 Forfeiture Events.
(a) The Committee may specify in an Award Agreement that the Participant's
rights, payments, and benefits with respect to an Award shall be subject to
reduction, cancellation, forfeiture, or recoupment upon the occurrence of
certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events may include, but shall not be
limited to, termination of employment for cause, termination of the
Participant's provision of services to the Company, an Affiliate, and/or
Subsidiary, violation of material Company, Affiliate, and/or Subsidiary
policies, breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Participant, or other conduct by the Participant
that is detrimental to the business or reputation of the Company, any
Affiliates, and/or Subsidiaries.
(b) Any amounts payable to Participants under this Plan shall be subject to
forfeiture as and to the extent provided in Section 304 of the Sarbanes-Oxley
Act of 2002 or other applicable law.
15.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
15.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
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15.4 Requirements of Law. The granting of Awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
15.5 Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company, a Subsidiary or Affiliate
may make to aid the Company in meeting its obligations under the Plan. Nothing
contained in the Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind (other than a rabbi trust,
as described below, if instituted), or a fiduciary relationship between the
Company and any Participant, beneficiary, legal representative, or any other
person. To the extent that any person acquires a right to receive payments from
the Company under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the
case may be. All payments to be made hereunder shall be paid from the general
funds of the Company, a Subsidiary or an Affiliate, as determined by the
Committee and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts; provided,
however, that the Company may establish a grantor trust within the meaning of
IRS Revenue Procedure 92-64 (a "rabbi trust") and fund such trust for the
purpose of providing payments when due hereunder.
15.6 Retirement and Welfare Plans. Neither Awards made under the Plan nor
cash paid pursuant to such Awards may be included as "compensation" for purposes
of computing the benefits payable to any Participant under the Company's or any
Subsidiary's or Affiliate's retirement plans (both qualified and non-qualified)
or welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a participant's benefit.
15.7 Nonexclusivity of the Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Committee to
adopt such other compensation arrangements as it may deem desirable for any
Participant.
15.8 No Constraint on Corporate Action. Nothing in this Plan shall be
construed to: (i) limit, impair, or otherwise affect the Company's or a
Subsidiary's or an Affiliate's right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer
all or any part of its business or assets; or, (ii) limit the right or power of
the Company or a Subsidiary or an Affiliate to take any action which such entity
deems to be necessary or appropriate.
15.9 Governing Law. The Plan and each Award Agreement shall be governed by
the laws of the State of Delaware, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of the
Plan to the substantive law of another jurisdiction. Unless otherwise provided
in the Award Agreement, recipients of an Award under the Plan are deemed to
submit to the exclusive jurisdiction and venue of the federal or state courts of
Delaware, to resolve any and all issues that may arise out of or relate to the
Plan or any related Award Agreement.
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W. R. BERKLEY CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
W. R. BERKLEY CORPORATION
The undersigned stockholder of W. R. BERKLEY CORPORATION hereby appoints IRA S.
LEDERMAN and EUGENE G. BALLARD, and either of them, the true and lawful agents
and proxies of the undersigned, with full power of substitution to each of them,
to vote all shares of common stock which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders to be held at the offices of the Company,
475 Steamboat Road, Greenwich, Connecticut on May 11, 2004, and at any
adjournment of such meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
See reverse for voting instructions.
- Please detach here -
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of 01 William R. Berkley, Jr. 03 Mark E. Brockbank [ ] FOR all nominees [ ] WITHHOLD AUTHORITY to
directors: 02 Ronald E. Blaylock 04 Rodney A. Hawes, Jr. listed except as marked vote for all
to the contrary below nominees listed
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, WRITE THE [ ]
NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.
2. To approve the W. R. Berkley Corporation 2004 Long-Term Incentive Plan. [ ] For [ ] Against [ ] Abstain
3. To approve the Amendment to the Restated Certificate of Incorporation of [ ] For [ ] Against [ ] Abstain
W. R. Berkley Corporation.
4. To ratify the appointment of KPMG LLP as independent certified public [ ] For [ ] Against [ ] Abstain
accountants for W. R. Berkley Corporation for the fiscal year ending
December 31, 2004
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting.
Address Change? Mark Box [ ] The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
Indicate changes below: for the 2004 Annual Meeting and the Annual Report for the fiscal year ended December 31, 2003.
DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED
ENVELOPE.
Date _______________________________________
[ ]
Signature(s) in Box
Please sign your name or names exactly as
printed opposite. When signing as attorney,
executor, administrator, trustee, guardian
or corporate officer, please give your full
title as such. Joint owners should each
sign. DATE, SIGN AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE.