UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ACE Limited
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO] ACE
NOTICE OF ANNUAL GENERAL MEETING
April 9, 2002
Hamilton, Bermuda
TO THE SHAREHOLDERS OF ACE LIMITED:
The Annual General Meeting of ACE Limited (the ''Company'') will be held on
Thursday, May 16, 2002, at 8:00 a.m. at ACE Global Headquarters, 17 Woodbourne
Avenue, Hamilton, Bermuda, for the following purposes:
1. To elect five directors to hold office until 2005;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December
31, 2002; and
3. To transact such other further business, if any, as lawfully may be
brought before the meeting.
Only shareholders of record, as shown by the transfer books of the Company,
at the close of business on April 1, 2002, are entitled to notice of, and to
vote at, the Annual General Meeting.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE, AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON,
YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. FOR
FURTHER INFORMATION CONCERNING THE INDIVIDUALS NOMINATED AS DIRECTORS, USE OF
THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE PROXY STATEMENT
ON THE FOLLOWING PAGES.
By Order of the Board of Directors,
Brian Duperreault
Chairman and Chief Executive Officer
ACE LIMITED
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton HM 08 Bermuda
April 9, 2002
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PROXY STATEMENT
-----------------
The Board of Directors of ACE Limited (the ''Company'') is soliciting the
accompanying proxy to be voted at the Annual General Meeting of the Company to
be held at 8:00 a.m. on Thursday, May 16, 2002, at ACE Global Headquarters, 17
Woodbourne Avenue, Hamilton, Bermuda, and any adjournments thereof. When the
proxy is properly executed and returned, the Ordinary Shares it represents
will, subject to any direction to the contrary, be voted at the meeting in
favor of the matters specified in the ''Notice of Annual General Meeting''
attached hereto.
Any shareholder giving a proxy may revoke it prior to its exercise by
providing the Secretary of the Company with written notice of revocation, by
voting in person at the Annual General Meeting or by executing a later-dated
proxy; provided, however, that the action is taken in sufficient time to permit
the necessary examination and tabulation of the subsequent proxy or revocation
before the vote is taken.
Only holders of Ordinary Shares of record as of the close of business on
April 1, 2002 will be entitled to vote at the meeting. As of the close of
business on April 1, 2002, there were outstanding 261,897,433 Ordinary Shares
of the Company entitled to vote at the meeting, with each Ordinary Share
entitling the holder of record on such date to one vote (except that if, and so
long as, the Controlled Shares (defined generally to include all shares of the
Company directly, indirectly or constructively owned or beneficially owned by
any person or group of persons) of any person constitute 10% or more of the
issued Ordinary Shares, the voting rights with respect to the Controlled Shares
owned by such person shall be limited, in the aggregate, to a voting power of
approximately 10%, pursuant to a formula specified in the Company's Amended and
Restated Articles of Association (the ''Articles'')).
The election of each nominee for director and the ratification of the
appointment of PricewaterhouseCoopers LLP require the affirmative vote of a
majority of the votes cast at the Annual General Meeting; provided there is a
quorum (consisting of not less than six shareholders present in person or by
proxy holding at least 50% of the issued and outstanding shares entitled to
vote at the Annual General Meeting). The Company will appoint one or more
inspectors of election to count votes cast in person or by proxy. Ordinary
Shares owned by shareholders electing to abstain from voting with respect to
any proposal and ''broker non-votes'' will be counted towards the presence of a
quorum but will not be considered present and voting with respect to elections
of directors or other matters to be voted upon at the Annual General Meeting.
Therefore, abstentions and ''broker non-votes'' will have no effect on the
outcome of the proposals to elect directors or to ratify the appointment of the
Company's independent accountants.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2001 accompanies this Proxy Statement.
This Proxy Statement, the attached Notice of Annual General Meeting and the
accompanying proxy card are first being mailed to shareholders on or about
April 15, 2002.
The Company knows of no specific matter to be brought before the Annual
General Meeting which is not referred to in the attached Notice of Annual
General Meeting. If any such matter comes before the meeting, including any
shareholder proposal properly made, the proxy holders will vote proxies in
accordance with their judgment.
1
ELECTION OF DIRECTORS
(Item A on Proxy Card)
The Company's Articles provide that the Company's Board of Directors shall
be divided into three classes with the terms of office of each class ending in
successive years. The Company's Articles provide for a maximum of 20 directors
and empower the Board of Directors to fix the exact number of directors and
appoint persons to fill any vacancies on the Board until the next Annual
General Meeting.
The Executive Committee of the Company's Board of Directors has nominated
Dominic J. Frederico, Donald Kramer, John A. Krol, Roberto G. Mendoza and
Walter A. Scott for election as directors of the Company to serve three-year
terms to expire at the Annual General Meeting in 2005 and until their
respective successors shall have been elected and shall have qualified. Each of
these individuals is currently serving as a director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES
AS DIRECTORS OF THE COMPANY.
It is the intention of the persons named as proxies, subject to any
direction to the contrary, to vote in favor of the candidates nominated by the
Board of Directors. If any one or more of the nominees is unable or unwilling
to serve, the proxies will, subject to any direction to the contrary, be voted
for such other person or persons as the Board of Directors may recommend.
Certain information with respect to the nominees for election as directors
proposed by the Company and the other directors whose terms of office as
directors will continue after the Annual General Meeting is set forth below.
Nominees for Election to Terms Expiring in 2005
Dominic J. Frederico, age 48, has served as President and Chief Operating
Officer of the Company and Chairman of ACE INA since November 1999. On November
16, 2001, Mr. Frederico was appointed to the Board of Directors. Mr. Frederico
has also served as Chairman, President and Chief Executive Officer of ACE INA
from May 1999 through November 1999. Mr. Frederico previously served as
President of ACE Bermuda since July 1997, Executive Vice President,
Underwriting since December 1996, and as Executive Vice President, Financial
Lines from January 1995 to December 1996. Mr. Frederico served in various
capacities at American International Group ("AIG") (insurance) in Europe and
the U.S. from 1982 to January 1995, most recently as Senior Vice President and
Chief Financial Officer of an AIG subsidiary, with multi-regional general
management responsibilities.
Donald Kramer, age 64, has been a director and Vice Chairman of the Company
since July 1996 following the acquisition of ACE Tempest Reinsurance Company
Limited (''ACE Tempest Re''), and was President of ACE Tempest Re from July
1996 until 1999. Mr. Kramer served as Chairman or Co-Chairman of the Board of
ACE Tempest Re from its formation in September 1993 until July 1996. Prior to
the formation of ACE Tempest Re, Mr. Kramer was President of Kramer Capital
Corporation (venture capital investments) from March to September 1993,
President of Carteret Federal Savings Bank (banking) from August 1991 to March
1993, Chairman of the Board of NAC Re Corporation (reinsurance) from June 1985
to June 1993, Chairman of the Board and Chief Executive Officer of KCP Holding
Company (insurance) from July 1986 to August 1991 and of its affiliates, KCC
Capital Managers (insurance investments) and Kramer Capital Consultants, Inc.
(insurance investments), as well as Chairman of the Board of its subsidiary,
National American Insurance Company of California (insurance) from September
1988 to August 1991. Mr. Kramer is a director of National Benefit Life
Insurance Company of New York City, a wholly-owned subsidiary of Citigroup and
a member of the Board of Trustees of the Brooklyn College Foundation.
John A. Krol, age 65, has been a director of the Company since August 2001.
Mr. Krol retired as Chairman and Chief Executive Officer of E.I. du Pont de
Nemours and Company (chemicals, fibers, petroleum, life
2
sciences and diversified business) in 1998. Mr. Krol served as Chief Executive
Officer of Du Pont from 1995 through January 1998. He was also President of Du
Pont from 1995 through October 1997. Mr. Krol is a member of the board of
directors of the MeadWestvaco Corporation, Armstrong World Industries, Inc. and
Milliken & Company, the advisory boards of Teijin Limited and the Bechtel
Corporation and the boards of trustees of Tufts University, the University of
Delaware and Hagley Museum.
Roberto G. Mendoza, age 56, has been a director of the Company since
November 1999 and previously served as a director of the Company from 1985 to
1996. Mr. Mendoza is a founder and co-Chief Executive Officer of Hancock,
Mendoza, Dachille & Merton, Ltd. (financial services) and is Chairman of Egg
plc (banking). Mr. Mendoza served as a managing director of Goldman, Sachs and
Co. (banking) from September 2000 until January 2001. Mr. Mendoza served as
Vice Chairman and director of the Boards of J.P. Morgan & Co. Incorporated and
its subsidiary Morgan Guaranty Trust Company of New York (banking) from 1990 to
April 12, 2000. Mr. Mendoza is a director of Prudential Banking PLC, Reuters
Group PLC, and Vitro S.A.
Walter A. Scott, age 64, has been a director of the Company since September
1989. Mr. Scott served as a consultant to the Company from October 1994 until
September 1996. Mr. Scott served as Chairman, President and Chief Executive
Officer of the Company from March 1991 until his retirement in September 1994
and as President and Chief Executive Officer from September 1989 to March 1991.
Mr. Scott is a director of Annuity and Life Re, Ltd. and a trustee of Lafayette
College.
Directors Whose Terms of Office Will Continue after this Meeting
Directors Whose Terms Expire in 2003
Michael G. Atieh, age 48, has been a director of the Company since September
1991. Mr. Atieh has served as Group President of Dendrite International, Inc.
(technology and services) since January 2002, Senior Vice President and Chief
Financial Officer of Dendrite International, Inc. from October 2000 to December
2001, as Vice President, U.S. Human Health, a division of Merck & Co., Inc.
(''Merck'') (pharmaceuticals) from January 1999 to September 2000, as Senior
Vice President--Sales of Merck-Medco Managed Care, L.L.C. (managed health
care), an indirect wholly-owned subsidiary of Merck from April 1994 to December
1998, as Vice President--Public Affairs of Merck from January 1994 to April
1994 and as Treasurer of Merck from April 1990 to December 1993.
Bruce L. Crockett, age 58, has been a director of the Company since May
1995. Mr. Crockett is currently a private investor. Mr. Crockett served as
President and Chief Executive Officer of COMSAT Corporation (''COMSAT'')
(information services) from February 1992 until July 1996 and as President and
Chief Operating Officer of COMSAT from April 1991 to February 1992. Mr.
Crockett was an employee of COMSAT since 1980 and held various operational and
financial positions including Vice President and Chief Financial Officer. Mr.
Crockett is Chairman of the Board of NETSAT28, Datapipe.com and Teletronics
International Inc. Mr. Crockett is also a director of International Business
Network for World Commerce & Industry, Ltd. (IBNET), Para-Protect Services,
Inc., the AIM Mutual Funds Boards, and DATABID.COM. Mr. Crockett is also a
member of the Board of Trustees of the University of Rochester.
Thomas J. Neff, age 64, has been a director of the Company since May 1997.
Mr. Neff has been with Spencer Stuart & Associates, N.A. (executive search
consulting) since 1976 serving as President of the worldwide firm from 1979 to
1996. Since 1996, Mr. Neff has served as chairman of Spencer Stuart, U.S. Mr.
Neff is a director of EXULT, Inc. and various mutual funds managed by Lord,
Abbett & Co.
Robert W. Staley, age 67, has been a director of the Company since January
1986. Mr. Staley retired March 1, 2000 as an officer and director of Emerson
Electric Co. (''Emerson'') (electric equipment) where he had been employed
since 1975, serving as Vice Chairman since November 1988. Mr. Staley continues
to serve Emerson as a Senior Advisor.
3
Gary M. Stuart, age 61, has been a director of the Company since March 1988.
Mr. Stuart served as Chief Financial Officer of Optimum Logistics Inc.
(logistics services) from August 2000 through August 2001. From 1981 until
November 1999, Mr. Stuart was an employee of Union Pacific Corporation
(transportation), serving as its Executive Vice President and Chief Financial
Officer from June 1998 through November 1999 and as its Vice President and
Treasurer from January 1990 through May 1999. Mr. Stuart was on the adjunct
faculty of the School of Business at Fairfield University from January through
May 2000 and is a member of its Advisory Board.
Directors Whose Terms Expire in 2004
Brian Duperreault, age 54, has been a director of the Company since he
joined the Company in October 1994. Mr. Duperreault has served as Chairman and
Chief Executive Officer of the Company since November 1999 and as Chairman,
President and Chief Executive Officer of the Company from October 1994 through
November 1999. Prior to joining the Company, Mr. Duperreault had been employed
with AIG since 1973 and served in various senior executive positions with AIG
and its affiliates from 1978 until September 1994, most recently as Executive
Vice President, Foreign General Insurance and, concurrently, as Chairman and
Chief Executive Officer of American International Underwriters Inc., a
subsidiary of AIG, from April 1994 to September 1994. Mr. Duperreault was
President of American International Underwriters Inc. from 1991 to April 1994,
and Chief Executive Officer of AIG affiliates in Japan and Korea from 1989
until 1991. Mr. Duperreault serves as a member of The American Academy of
Actuaries, a member of the Board of Trustees of Saint Joseph's University, a
member of the College of Insurance's Board of Trustees and a director of the
Bank of N.T. Butterfield & Son (Bermuda).
Robert M. Hernandez, age 57, has been a director of the Company since
September 1985. Mr. Hernandez is Chairman of the Board of RTI International
Metals, Inc. (metals). Mr. Hernandez served as Vice Chairman, Director and
Chief Financial Officer of USX Corporation (''USX'') (energy and steel) from
December 1994 to December 2001, as Executive Vice President--Accounting &
Finance and Chief Financial Officer of USX from November 1991 until November
1994 and as Senior Vice President--Finance & Treasurer from October 1990 to
October 1991. Mr. Hernandez was President and Chief Operating Officer of the US
Diversified Group of USX from May 1989 until October 1990. Mr. Hernandez is
Vice Chairman, Board of Trustees of the BlackRock Funds; a Director of the
Strategic Investment Fund, Inc., the Strategic Regional Developments, Inc. and
the University of Pittsburgh Medical Center Health System.
Peter Menikoff, age 61, has been a director of the Company since January
1986. Mr. Menikoff is currently a private investor and most recently he was the
interim chief financial officer of Vlasic Foods International Inc. from
February 2000 to May 2001. Mr. Menikoff served as President and Chief Executive
Officer of CONEMSCO, Inc. (oil and gas drilling/production supplies, services
and equipment) from April 1997 until June 1998. Previously, Mr. Menikoff served
as Executive Vice President and Chief Administrative Officer of Tenneco Energy
Corporation (energy) since June 1995. Mr. Menikoff served as a Senior Vice
President of Tenneco, Inc. (diversified industrial) from June 1994 until April
1997. Mr. Menikoff served as Executive Vice President of Case Corporation
(agricultural and construction equipment), a subsidiary of Tenneco, Inc., from
November 1991 to June 1994. Mr. Menikoff served as Treasurer of Tenneco, Inc.
from May 1989 to November 1991.
Robert Ripp, age 60, has been a director of the Company since December 1991.
Mr. Ripp is Chairman of the Board, Chief Executive Officer and director of
Lightpath Technologies (fiber optics components manufacturing), a Nasdaq listed
company. Mr. Ripp is also a director of AJ Gallagher Inc. (NYSE), an insurance
brokerage company. Mr. Ripp also serves as a director of Lightchip Inc., a
privately held fiber optics development venture. Mr. Ripp served as Director,
Chairman and Chief Executive Officer of AMP Incorporated (electrical
connectors) from August 1998 through May 1999. Mr. Ripp served as Vice
President and Chief Financial Officer of AMP Incorporated from August 1994
through July 1998, as Vice President and Treasurer of International Business
Machines Corporation (electronic computer equipment) from July 1989 through
September 1993.
Dermot F. Smurfit, age 57, has been a director of the Company since August
1997. Mr. Smurfit has been Joint Deputy Chairman of Jefferson Smurfit Group plc
(''Jefferson Smurfit'') (paper, paperboard and packaging)
4
since January 1984, Chairman and Chief Executive of Jefferson Smurfit's
continental European operations from 1994 to 1997, Director of Sales and
Marketing since 1997, and has held a number of other senior positions with
Jefferson Smurfit. Mr. Smurfit is a director of Jefferson Smurfit and Smurfit
Stone Container Corporation, a U.S. listed associate of The Smurfit Group. Mr.
Smurfit is a member of the Board of Confederation of European Paper Industries
and a member of the advisory Board of AON Groupe Nederland.
There are no arrangements or understandings between any director and any
other person pursuant to which any director was or is selected as a director or
nominee.
Meetings and Committees of the Board of Directors
During the year ended December 31, 2001, There were four meetings of the
Board of Directors. All incumbent directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and committees of the
Board of which they were a member (during the period served) held during the
year ended December 31, 2001.
The Board of Directors has established four standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee and the Finance
Committee.
Audit Committee
The Audit Committee is composed entirely of non-management directors, each
of whom is independent of the Company and its management, as defined by the New
York Stock Exchange listing standards. The Audit Committee provides oversight
of the financial reporting process, the system of internal controls, the audit
process, the performance of the Company's internal auditors and the performance
and independence of the independent accountants. The Audit Committee is
comprised of Sidney F. Wentz (Chairman), who will retire from the Board of
Directors at the Annual General Meeting, Michael G. Atieh, Bruce L. Crockett,
John A. Krol, Peter Menikoff, Robert Ripp and Gary M. Stuart. Upon Mr. Wentz's
retirement, Robert W. Staley will become Chairman of the Audit Committee. The
Audit Committee operates under a written charter, a copy of which is attached
as Exhibit A to this proxy statement. The Audit Committee held four meetings
during the year ended December 31, 2001.
Compensation Committee
The Compensation Committee has responsibility for determining executive
compensation. The Compensation Committee is comprised of Bruce L. Crockett
(Chairman), Robert M. Hernandez, Roberto G. Mendoza, Thomas J. Neff, Dermot F.
Smurfit and Sidney F. Wentz, who will retire from the Board of Directors at the
Annual General Meeting. The Compensation Committee held four meetings during
the year ended December 31, 2001.
Executive Committee
Except as expressly limited by applicable law, by the Company's Memorandum
of Association or Articles or by the Board of Directors, the Executive
Committee may exercise all the powers and authorities of the Board of Directors
between meetings of the full Board of Directors, with its primary focus to act
for the full Board when it is not practical to convene meetings of the full
Board and to serve as a strategic sounding board for the Chairman and Chief
Executive Officer of the Company. The Executive Committee also has
responsibility for nominating directors and to review and make recommendations
to the full Board regarding director compensation. The Executive Committee will
consider a shareholder's suggestion for candidates if mailed to: Secretary, ACE
Limited, ACE Global Headquarters, 17 Woodbourne Avenue, Hamilton HM 08 Bermuda.
Any such suggestion with respect to directors to be elected at the Annual
General Meeting to be held in 2003 must be received not later than March 17,
2003 and must comply with Article 40 of the Company's Articles. The Executive
Committee also makes recommendations concerning succession plans for senior
executive officers of
5
the Company and reviews the development and performance of the Company's senior
executive officers. The Executive Committee is comprised of Robert M. Hernandez
(Chairman), Brian Duperreault, Donald Kramer, Roberto G. Mendoza, Thomas J.
Neff and Robert W. Staley. The Executive Committee held four meetings during
the year ended December 31, 2001.
Finance Committee
The Finance Committee of the Board of Directors reviews the Company's
investment policy to ensure that it is consistent with the Company's goals,
strategies and objectives. Overall investment guidelines are approved by the
Finance Committee to ensure that appropriate levels of portfolio liquidity,
credit quality, diversification, and volatility are maintained. The Finance
Committee is comprised of Peter Menikoff (Chairman), Dominic J. Frederico,
Robert Ripp, Walter A. Scott, Dermot F. Smurfit and Gary M. Stuart. The Finance
Committee held four meetings during the year ended December 31, 2001.
Director Compensation
Pursuant to the Company's 1995 Outside Directors Plan, non-management
directors of the Company are awarded an annual ''retainer award'' in the form
of Ordinary Shares having a fair market value of $35,000. A director completing
less than a full year of service receives a pro rata portion of the annual
retainer award. The retainer award is made as of the date of the Company's
annual general meeting. The fair market value of the Ordinary Shares is
determined as of the award date. The value of any fractional share is generally
distributed in cash. Directors vest in the retainer award shares as of the day
immediately preceding the next annual general meeting. All retainer award
shares become fully vested upon a ''change in control'' of the Company (as
defined in the plan), or if the director ceases service as a director because
of death or disability. If a director ceases service as a director for any
other reason, all unvested retainer award shares are forfeited.
In addition, each director who serves as the chairman of any committee of
the Board during any plan year quarter is awarded a ''committee chairman
award'' as of the first business day of the next following plan quarter
(generally ninety-day periods following the annual general meeting), which
award is the number of Ordinary Shares having a fair market value, determined
as of such date, of $1,250 per quarter. All shares awarded as a committee
chairman award are fully vested at the time of award. In addition, a director
may elect to receive his committee chairman award in cash.
Directors are also paid $3,000 for attendance at each meeting of the Board
of Directors and $1,000 for attendance at each meeting of a committee of the
Board of Directors. A director may elect to receive meeting fees in the form of
fully vested Ordinary Shares. Directors are also reimbursed for their
reasonable expenses in connection with Board service. In addition, in May 2001,
the 1995 Outside Directors Plan was amended to provide for an award of 4,000
options to each outside director for each plan year, beginning May 2001. The
amendment also provided for a one-time award of 2,000 options to each outside
director in May 2001.
A director may elect to defer the receipt of Ordinary Shares or cash
otherwise payable.
Certain Business Relationships
Certain shareholders of the Company and their affiliates, including the
employers of or entities otherwise associated with certain directors and
officers and their affiliates, have purchased insurance from the Company on
terms the Company believes were no more favorable to these insureds than those
made available to other customers.
The Company has entered into a Consulting Agreement dated as of January 1,
2000 with Kramer Capital Corporation. Donald Kramer is a part time employee of
Kramer Capital Corporation. Pursuant to the Consulting Agreement, Kramer
Capital Corporation provides consulting services to the Company with respect to
strategic opportunities and trends in the insurance and financial services
industry. The Consulting Agreement specifies
6
that Mr. Kramer and others will be made available to perform these services for
the Company. The Company will pay Kramer Capital Corporation fees as agreed in
writing from time to time. The Company will also reimburse Kramer Capital
Corporation for reasonable out-of-pocket expenses. The Company paid Kramer
Capital Corporation approximately $315,552 for services performed during 2001
and expects to pay a similar amount for services to be performed by Kramer
Capital Corporation during 2002. Mr. Kramer has no financial interest in Kramer
Capital Corporation, either directly or indirectly through a related person,
and received a salary of $100,000 as compensation for his services to Kramer
Capital Corporation during the year 2001.
In March 1999, the Company made a $250,000 housing loan to Dominic J.
Frederico. In January 2001, the Company loaned Mr. Frederico an additional
$350,000. The loans bear interest at 4.83% and 5.61%, respectively, being the
''Applicable Federal Rate'' as determined in accordance with Section 1274(d) of
the Internal Revenue Code of 1986, as amended, as of the date of each loan. On
each of March 23, 2000 and March 23, 2001, $50,000, plus interest, of the
original loan was forgiven. In addition, an aggregate of $100,000, plus
interest, of the loans was forgiven in the first quarter of 2002. These loans
become immediately due if Mr. Frederico resigns from the Company voluntarily or
if the Company terminates him for cause.
Putnam Investments, Inc. ("Putnam"), a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. ("Marsh & McLennan"), has two investment adviser
subsidiaries serving the Putnam family of mutual funds and Putnam's
institutional clients and is deemed to have beneficially held 7.5% of the
Company's outstanding Ordinary Shares as of December 31, 2001. Marsh & McLennan
and its affiliates are leading global insurance and reinsurance brokers that
transact insurance business with all of the Company's business segments. As a
result, the Company and its subsidiaries pay to affiliates of Marsh & McLennan
normal and customary commissions for brokerage activities performed in
connection with these transactions. For the 2001 fiscal year, approximately 15%
of the Company's gross written premiums were placed by Marsh & McLennan
affiliates. William M. Mercer, Incorporated ("Mercer"), an employee benefits
consulting firm and a wholly-owned subsidiary of Marsh & McLennan, serves as
the Company's compensation consultants and advises the Compensation Committee
of the Company's Board of Directors. The Company and its subsidiaries paid
Mercer $707,795 in fiscal 2001.
Section 16(a) Beneficial Ownership Reporting Compliance
Executive officers and directors of the Company are subject to the reporting
requirements of Section 16 of the Securities and Exchange Act of 1934, as
amended (the ''Exchange Act''). Christopher Z. Marshall was eight days late in
reporting two sales transactions on his Form 4 for March 2001 and Sidney F.
Wentz did not originally include two purchases aggregating 60 shares in
December 2000 which should have been included in his Form 5 for 2000, but such
report on Form 5 was subsequently amended to include such purchase.
7
BENEFICIAL OWNERSHIP OF ORDINARY SHARES
Directors and Officers
The following table sets forth information, as of March 31, 2002, with
respect to the beneficial ownership of Ordinary Shares by Brian Duperreault,
the Company's Chairman and Chief Executive Officer (the Company's ''CEO''), the
Company's other four most highly compensated executive officers for 2001 (the
''Named Executive Officers''), each of the Company's directors and by all
directors and executive officers of the Company as a group. Unless otherwise
indicated, the named individual has sole voting and investment power over the
Ordinary Shares under the column ''Ordinary Shares Beneficially Owned.'' The
Ordinary Shares listed for each director, the CEO and each Named Executive
Officer constitute less than one percent of the outstanding Ordinary Shares.
The Ordinary Shares owned by all directors and executive officers as a group,
constitute approximately 2% of the outstanding Ordinary Shares.
Ordinary Ordinary
Shares Shares Restricted
Beneficially Subject to Ordinary
Name of Beneficial Owner Owned Option (1) Shares (2)
- ------------------------ ------------ ---------- ----------
Brian Duperreault (3)................................................. 341,342 1,551,665 213,250
Dominic J. Frederico.................................................. 90,606 392,499 124,750
Donald Kramer......................................................... 136,364 1,193,895 30,084
Christopher Z. Marshall............................................... 31,341 374,832 63,417
Gary T. Schmalzriedt.................................................. 66,012 69,498 35,750
Michael G. Atieh (4).................................................. 13,502 1,999 992
Bruce L. Crockett (4)................................................. 10,692 1,999 992
Robert M. Hernandez (4)............................................... 45,623 1,999 992
John A. Krol.......................................................... -- 1,010 776
Roberto G. Mendoza (4)................................................ 28,116 1,999 992
Peter Menikoff (3) (4)................................................ 26,451 1,999 992
Thomas J. Neff (4).................................................... 11,839 1,999 992
Robert Ripp (4)....................................................... 17,202 1,999 992
Walter A. Scott (4)................................................... 218,368 420,999 992
Dermot F. Smurfit..................................................... 5,559 1,999 992
Robert W. Staley...................................................... 11,596 1,999 992
Gary M. Stuart (4).................................................... 10,945 1,999 992
Sidney F. Wentz (3)................................................... 15,824 1,999 992
All directors & executive officers as a group (20 individuals) (3) (5) 1,036,969 3,791,154 461,349
- --------
(1) Represents Ordinary Shares which the reporting person has the right to
acquire within 60 days of March 31, 2002 pursuant to options.
(2) The reporting person has the right to vote (but not dispose of) the
Ordinary Shares listed under ''Restricted Ordinary Shares.''
(3) Messrs. Duperreault, Menikoff, and Wentz had shared power to vote and/or
dispose of 100, 10,800, and 6,000, respectively, of the Ordinary Shares
listed. The directors and officers have shared power to vote and/or dispose
of 16,900, in the aggregate, of the shares listed as owned by the directors
and officers as a group.
(4) The amounts included under ''Ordinary Shares Beneficially Owned'' and
''Restricted Ordinary Shares'' include certain Ordinary Shares for which
the reporting person has elected to defer receipt. The reporting person has
the right to dispose of (but not to vote) such Ordinary Shares.
(5) Includes the holdings of individuals who were directors or executive
officers of the Company as of March 31, 2002.
8
Other Beneficial Owners
The following table sets forth information regarding each person known by
the Company (including corporate groups) to own of record or beneficially own
more than five percent of the Company's outstanding Ordinary Shares as of the
dates indicated below.
Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned Class
------------------------------------ ------------------ ----------
Franklin Resources, Inc. (1)................ 16,924,985 6.5%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, California 94404-7777
Janus Capital Corporation (2)............... 19,680,960 7.6%
100 Fillmore Street
Denver, Colorado 80206-4923
Massachusetts Financial Services Company (3) 18,433,196 7.1%
500 Boylston Street
Boston, MA 02116
Putnam Investments, LLC (4)................. 19,391,989 7.5%
One Post Office Square
Boston, MA 02109
Wellington Management Company, LLP (5)...... 35,538,820 13.7%
75 State Street
Boston, Massachusetts 02109
- --------
(1) As of December 31, 2001, based on a Schedule 13G filed by Franklin
Resources, Inc. (''FRI''). According to such Schedule 13G, FRI is a parent
holding company, in accordance with Rule 13d-1(b)(1)(ii)(G), of investment
advisors to the Franklin/Templeton Group of Funds (the ''Adviser
Subsidiaries''). As of December 31, 2001, the Adviser Subsidiaries
collectively have sole voting power over 16,800,941 Ordinary Shares and
sole dispositive power over 16,924,985 Ordinary Shares.
(2) As of December 31, 2001, based on a Schedule 13G filed by Janus Capital
Corporation ("Janus"). According to such Schedule 13G, Janus is an
investment adviser, registered under Section 203 of the Investment Advisers
Act of 1940, as amended, which furnishes investment advice to several
investment companies registered under Section 8 of the Investment Company
Act of 1940 and individual and institutional clients (collectively, the
"Managed Portfolios"). As a result of its role as investment adviser or
sub-adviser to the Managed Portfolios, Janus has sole voting power and sole
disposition power over 19,680,960 Ordinary Shares held by such Managed
Portfolios.
(3) As of December 31, 2001, based on a Schedule 13G filed by Massachusetts
Financial Services Company ("MFS"). According to such Schedule 13G, MFS has
sole dispositive power over 18,433,196 Ordinary Shares, of which 72,166
Ordinary Shares may be acquired through conversion of convertible preferred
securities. According to the Schedule 13G, MFS has sole voting power over
18,133,222 Ordinary Shares.
(4) As of December 31, 2001, based on a Schedule 13G filed by Putnam, a wholly
owned subsidiary of Marsh & McLennan. According to such Schedule 13G,
Putnam has subsidiaries that are investment advisers, registered under
Section 203 of the Investment Advisers Act of 1940, as amended. As of
December 31, 2001, Putnam and its subsidiaries, in their capacity as
investment advisors, have shared dispositive power over 19,391,989 Ordinary
Shares that are owned by investment advisory clients. According to the
Schedule 13G, Putnam and its subsidiaries have shared voting power over
3,066,653 Ordinary Shares.
(5) As of December 31, 2001, based on a Schedule 13G filed by Wellington
Management Company, LLP (''WMC''). WMC is a registered investment advisor
under the Investment Advisers Act of 1940, as amended. As of December 31,
2001, WMC, in its capacity as investment advisors, may be deemed to have
shared dispositive power over 35,538,820 Ordinary Shares that are owned by
numerous investment advisory clients, none of which is known to have such
interest with respect to more than five percent of the class. According to
the Schedule 13G, WMC has shared voting power over 20,716,405 Ordinary
Shares.
Other than as disclosed above, there are no persons who own of record, or
are known by the Company to beneficially own, as of February 28, 2002, more
than five percent of the Company's outstanding Ordinary Shares.
9
EXECUTIVE COMPENSATION
The following table sets forth, in summary form, compensation earned by the
Company's CEO and by the Named Executive Officers of the Company for the
periods presented.
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards
--------------------------------------- --------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Fiscal Compensation Awards Options/SARs Compensation
Principal Position Year Salary Bonus (1) (2) (#) (4)
------------------ ------ --------- ---------- ------------ ---------- ------------ ------------
Brian Duperreault........ 2001 $ 925,008 $1,300,000 $ 284,980 $1,996,500(3)(6) 462,000(3) $424,876
Chairman and Chief 2000 $ 875,000 $2,000,000(5) $ 284,925 -- (3) -- (3) $431,250
Executive Officer 1999 $ 800,000 $1,400,000 $ 222,660 $1,158,750(6) 170,000 $330,000
ACE Limited
Dominic J. Frederico..... 2001 $ 800,427 $ 800,000 $ 180,398 $ 798,600(3)(6) 82,500(3) $295,526
President and Chief 2000 $ 650,000 $1,250,000(5) $ 143,592 -- (3) -- (3) $285,000
Operating Officer 1999 $ 525,000 $ 650,000 $ 153,359 $ 772,500(6) 90,000 $176,250
ACE Limited;
Chairman of ACE INA
Donald Kramer............ 2001 $ 530,422(7) $ 400,000 -- $ 399,300(3)(6) 38,500(3) $151,674
Vice Chairman 2000 $ 525,000(7) $ 625,000(5) -- -- (3) -- (3) $172,500
ACE Limited 1999 $ 547,211 $ 500,000 -- $ 289,688(6) 50,000 $157,082
Gary T. Schmalzriedt..... 2001 $ 520,834 $ 500,000 $216,225 $ 399,300(3)(6) 38,500(3) $ 80,500
President and Chief 2000 $ 425,004 $ 279,000(5) $268,280 -- (3) -- (3) $ 21,250
Executive Officer 1999 $ 166,670 $ 298,000 $109,230 $ 289,688(6) 40,000 --
ACE Europe and
ACE Global Markets....
Christopher Z. Marshall.. 2001 $ 554,500 $ 400,000 -- $ 399,300(3)(6) 38,500(3) $164,658
Executive Assistant 2000 $ 525,000 $ 600,000(5) -- -- (3) -- (3) $168,750
to the Chairman, 1999 $ 475,000 $ 450,000 -- $ 675,938(6) 60,000 $138,750
Strategic Initiatives,
ACE Limited
- --------
(1) Other annual compensation for the year ended December 31, 2001 includes
commuting and living expenses for Messrs. Duperreault, Frederico and
Schmalzriedt of $194,000, $76,781 and $137,000, respectively; personal
travel on the Company's jet for Messrs. Duperreault and Frederico of
$50,796 and $11,610, respectively; loan forgiveness of $59,660 for Mr.
Frederico; and relocation expenses for Mr. Schmazlriedt of $63,000. Other
annual compensation for the year ended December 31, 2000 includes commuting
and living expenses for Messrs. Duperreault and Frederico of $194,000 and
$76,151, respectively; personal travel on the Company's jet for Mr.
Duperreault of $64,817; and loan forgiveness of $62,075 for Mr. Frederico.
Other annual compensation for the year ended December 31, 1999 includes
commuting and living expenses for Messrs. Duperreault and Frederico in the
amount of $194,000 and $126,500, respectively.
(2) As of December 31, 2001, the number and value of restricted Ordinary Shares
held by each of the above named executive officers was: Mr.
Duperreault--177,000 ($7,106,550), Mr. Frederico--103,000 ($4,135,450), Mr.
Kramer--21,834 ($876,635), Mr. Schmalzriedt--19,735 ($792,360) and Mr.
Marshall--55,167 ($2,214,955). Such values were determined by multiplying
the number of shares by $40.15 (the closing price of the Ordinary Shares on
the New York Stock Exchange (the ''NYSE'') on December 31, 2001).
(3) As reported in the proxy statement for the 2001 Annual General Meeting, in
order to take into account the performance during 2000, the Compensation
Committee decided to make restricted stock and option awards at its
February 2001 meeting instead of its November 2000 meeting. Accordingly,
there were no restricted stock or option awards during 2000. However, the
Compensation Committee intended awards made in February 2001 as
compensation for 2000. Similarly, the Compensation Committee intended the
restricted stock and option awards made at its February 2002 meeting as
compensation for 2001. The February 2002 awards are reported in the
subsequent tables entitled "2002 Restricted Stock Awards" and "2002 Option
Grants."
10
(4) All other compensation represents contributions by the Company to defined
contribution plans on behalf of the named individuals for the above amounts.
(5) These bonuses were awarded with respect to a 15-month period from October
1, 1999 through December 31, 2000.
(6) The value of the restricted shares awarded to the individuals during the
year ended December 31, 2001 was determined by multiplying the number of
shares awarded by the closing price of the Ordinary Shares on the NYSE on
the date of the grant. All such restricted shares were awarded on February
22, 2001, on which date the closing price for Ordinary Shares on the NYSE
was $36.30. The value of the restricted shares awarded to the individuals
during the year ended December 31, 1999 was determined by multiplying the
number of shares awarded by the closing price of the Ordinary Shares on the
NYSE on the date of the grant. All such restricted shares were awarded on
November 18, 1999, on which date the closing price for Ordinary Shares on
the NYSE was $19.3125. The number of restricted Ordinary Shares awarded to
each of the CEO and the Named Executive Officers was:
Fiscal Fiscal
Name 2001 1999
---- ------ ------
Brian Duperreault................. 55,000 60,000
Dominic J. Frederico.............. 33,000 40,000
Donald Kramer..................... 11,000 15,000
Gary T. Schmalzriedt.............. 11,000 15,000
Christopher Z. Marshall........... 11,000 35,000
With respect to all restricted Ordinary Shares awarded to the CEO and the
Named Executive Officers in 2001 and 1999, the restrictions with respect to
one-quarter of the Ordinary Shares lapse on each of the first, second,
third and fourth anniversary of the date of the awards. During the
restricted period, the executive officers are entitled to vote the Ordinary
Shares and receive dividends.
(7) Includes $100,000 salary from Kramer Capital Corporation, which the Company
has retained for consulting services. See "Certain Business Relationships."
2001 Option Grants
The following table sets forth information concerning awarded stock options
made to the Company's CEO and Named Executive Officers during the year 2001.
Percent of Potential Realized Value
Total at Assumed Annual Rate
Number Options of Stock Price
of Awarded Exercise Appreciation for Option
Options to or Base Term
Awarded Employees Price ------------------------
Name in 2001 in 2001 ($/Sh) Expiration Date 5% 10%
- ---- ------- ---------- -------- ----------------- ----------- -----------
Brian Duperreault...... 462,000(1) 12.31% $36.30 February 22, 2011 $10,546,940 $26,728,017
Dominic J. Frederico... 82,500(2) 2.19% $36.30 February 22, 2011 $ 1,883,382 $ 4,772,860
Donald Kramer.......... 38,500(2) 1.03% $36.30 February 22, 2011 $ 878,912 $ 2,227,335
Gary T. Schmalzriedt... 38,500(2) 1.03% $36.30 February 22, 2011 $ 878,912 $ 2,227,335
Christopher Z. Marshall 38,500(2) 1.03% $36.30 February 22, 2011 $ 878,912 $ 2,227,335
- --------
(1) 220,000 options vest one-third on the first, second and third anniversary
of the grant and 242,000 options vest on the fifth anniversary of the grant.
(2) Options vest one-third on the first, second and third anniversary of the
grant.
11
Option Exercises and Values at December 31, 2001
The following table sets forth information concerning option exercises, the
number of unexercised stock options outstanding at December 31, 2001, and the
value of any unexercised in-the-money stock options outstanding at such time,
held by the Company's CEO and the Named Executive Officers. There were no stock
appreciation rights outstanding at December 31, 2001.
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at the-Money Options at
Shares Acquired Fiscal Year-End (#) Fiscal Year-End ($)
Name on Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- ------------------ ------------------------- -------------------------
Brian Duperreault...... -- -- 1,478,333/518,667 $37,186,934/$2,959,499
Dominic J. Frederico... 10,000 $323,350 365,000/112,500 $ 6,539,125/$ 942,750
Donald Kramer.......... -- -- 1,181,063/ 55,167 $34,861,869/$ 495,524
Gary T. Schmalzriedt... -- -- 56,666/ 51,834 $ 918,278/$ 426,072
Christopher Z. Marshall -- -- 362,000/ 58,500 $ 7,650,799/$ 564,975
Awards Made in 2002 Relating to the Last Fiscal Year
Awards of restricted stock and options made in February 2002 relate to
compensation for the year 2001 and are therefore reported below.
2002 Restricted Stock Awards
The following table sets forth information concerning restricted stock
awards in February 2002 to the CEO and the Named Executive Officers.
Restricted
Stock
Name Awards (1)
---- ----------
Brian Duperreault...... $2,195,000
Dominic J. Frederico... $1,317,000
Donald Kramer.......... $ 482,900
Gary T. Schmalzriedt... $ 878,000
Christopher Z. Marshall $ 482,900
- --------
(1) The value of the restricted shares awarded to the individuals in February
2002 was determined by multiplying the number of shares awarded by the
closing price of the Ordinary Shares on the NYSE on the date of the grant.
All such restricted shares were awarded on February 28, 2002, on which date
the closing price for Ordinary Shares on the NYSE was $43.90. The number of
restricted Ordinary Shares awarded to each of the CEO and the Named
Executive Officers was:
Number of Restricted
Name Ordinary Shares
---- --------------------
Brian Duperreault...... 50,000
Dominic J. Frederico... 30,000
Donald Kramer.......... 11,000
Gary T. Schmalzriedt... 20,000
Christopher Z. Marshall 11,000
With respect to all restricted Ordinary Shares awarded to the CEO and the
Named Executive Officers in February 2002, the restrictions with respect to
one-quarter of the Ordinary Shares lapse on each of the first, second, third
and fourth anniversary of the date of the awards.
12
2002 Option Grants
The following table sets forth information concerning awards of stock
options made to the Company's CEO and to the Named Executive Officers in
February 2002.
Potential Realized Value
Percent of at Assumed Annual
Total Options Rate of
Number of Awarded to Stock Price Appreciation
Options Employees in Exercise or for Option Term
Awarded in February Base Price ------------------------
Name February 2002 2002 ($/Sh) Expiration Date 5% 10%
- ---- ------------- ------------- ----------- ----------------- ---------- -----------
Brian Duperreault...... 220,000(1) 5.08% $43.90 February 28, 2012 $6,073,365 $15,392,365
Dominic J. Frederico... 232,500(2) 5.37% $43.90 February 28, 2012 $6,418,970 $16,266,931
Donald Kramer.......... 40,000(1) 0.92% $43.90 February 28, 2012 $1,104,339 $ 2,798,612
Gary T. Schmalzriedt... 60,000(1) 1.39% $43.90 February 28, 2012 $1,656,508 $ 4,197,918
Christopher Z. Marshall 40,000(1) 0.92% $43.90 February 28, 2012 $1,104,339 $ 2,798,612
- --------
(1) Options vest one-third on the first, second and third anniversary of the
grant.
(2) 82,500 options vest one-third on the first, second and third anniversary of
the grant and 150,000 options vest on the fifth anniversary of the grant.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors has
responsibility for determining the compensation of the Company's executive
officers. None of the members of the Compensation Committee was an officer or
employee of the Company. No officer or employee of the Company serves on the
compensation committee of any company that employs any member of the
Compensation Committee.
Employment Agreements
The following is intended to be a summary of the terms of the employment
agreements entered into between the Company and the executive officers named
below.
The Company has entered into an agreement with Brian Duperreault. This
agreement provided for a base salary of $550,000 per year, subject to increase.
Effective January 1, 2002, Mr. Duperreault's annual base salary is $980,000.
The agreement also provides for an annual discretionary bonus. Mr. Duperreault
is also eligible to participate in the Company's benefit plans. Pursuant to an
Option and Restricted Share Agreement and Plan entered into in connection with
Mr. Duperreault's employment agreement, Mr. Duperreault was awarded 300,000
restricted shares and options to purchase 900,000 Ordinary Shares at $7.542 per
Ordinary Share (each as adjusted to give effect to the stock split). All of the
aforementioned shares of restricted stock have vested and all of the
aforementioned options are now exercisable. The aforementioned options will
expire on September 30, 2004. During the 1998 fiscal year Mr. Duperreault
exercised the aforementioned options with respect to 195,000 Ordinary Shares.
Mr. Duperreault may exercise any of the options for a period of one year if his
termination is by reason of his death or disability or by the Company without
cause and for 30 days if such termination is by the Company for cause or
voluntarily by Mr. Duperreault. The agreement also provides Mr. Duperreault
with customary executive benefits, including participation in the Company's
retirement plan, the Company's supplemental executive retirement plan, various
insurance plans, reimbursement of housing and certain personal travel expenses
and, generally, such other benefit programs as are available to the Company's
other senior executives. The agreement is now subject to automatic one-year
renewals unless notice of non-renewal is provided by the Company's Board of
Directors. In addition, if, following a change in control, Mr. Duperreault's
employment is terminated without cause, his salary and benefits will continue
for 12 months and he will be entitled to any previously awarded but unpaid
bonus and a bonus for any uncompleted fiscal year based upon the bonus for the
last completed fiscal year and the number of days in the then current fiscal
year in which he was employed. Pursuant to the agreement, Mr. Duperreault has
agreed not to engage in any activity in Bermuda or the Cayman Islands for a
period of 12 months following termination of his employment with the Company
that
13
would compete with any business being conducted by the Company or its
subsidiaries, or which was actively being developed by the Company or its
subsidiaries during the term of Mr. Duperreault's employment.
A ''change in control'' under Mr. Duperreault's employment agreement is
generally deemed to occur when (i) any person becomes the beneficial owner of
50% or more of the voting stock of the Company, (ii) the majority of the Board
consists of individuals other than Incumbent Directors, which term means the
members of the Board on the date of the Agreement; provided that any person
becoming a director subsequent to such date whose election or nomination for
election was supported by three-quarters of the directors who then comprised
the Incumbent Directors shall be considered to be an Incumbent Director; (iii)
the Company adopts any plan of liquidation providing for the distribution of
all or substantially all of its assets; (iv) all or substantially all of the
assets or business of the Company are disposed of pursuant to a merger,
consolidation or other transaction (unless the shareholders of the Company
immediately prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in substantially the same proportion
as they owned the voting stock of the Company, all of the voting stock or other
ownership interests of the entity or entities, if any, that succeed to the
business of the Company); or (v) the Company combines with another company and
is the surviving corporation but, immediately after the combination, the
shareholders of the Company immediately prior to the combination hold, directly
or indirectly, 50% or less of the voting stock of the combined company.
The Company has entered into an agreement with Dominic J. Frederico,
pursuant to which he serves as President and Chief Operating Officer, ACE
Limited. The agreement provided for a base salary of $320,000 per year, subject
to increase, an annual discretionary bonus plus participation in the Company's
benefit plans. Effective January 1, 2002, Mr. Frederico's annual base salary is
$850,000. Pursuant to his agreement, Mr. Frederico was awarded options to
purchase 30,000 Ordinary Shares at $7.625 per Ordinary Share (as adjusted to
give effect to the stock split). These options have become exercisable and
expire on January 9, 2005. During the 2001 fiscal year Mr. Frederico exercised
10,000 of these options. The agreement also provides Mr. Frederico with
customary executive benefits, including participation in the Company's
retirement plan, the Company's supplemental executive retirement plan, various
insurance plans, reimbursement of housing and certain personal travel expenses
and, generally, such other benefit programs as are available to the Company's
other senior executives. The agreement is now subject to automatic one-year
renewals unless notice of non-renewal is provided by the Company. Upon
termination without cause, Mr. Frederico's salary and benefits are agreed to
continue for 24 months and any previously awarded but unpaid bonus is to be
paid. Pursuant to the agreement, Mr. Frederico has agreed not to engage in any
activity in the United States, Bermuda or the Cayman Islands for a period of 12
months following his termination of employment with the Company that would
compete with the business of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the ''Committee'') is
comprised entirely of independent, non-management directors. The Committee has
responsibility for developing and implementing the Company's compensation
policy for senior management, and for determining the compensation for the
executive officers of the Company. The goal of the Committee is to achieve fair
compensation for the individuals and to enhance shareholder value by continuing
to closely align the financial rewards of management with those of the
Company's shareholders.
The Company's compensation program is structured to support the human
resource requirements of its business. The Company seeks to attract and retain
qualified executives who are creative, motivated and dedicated. With respect to
its executive officers, the Company competes with property and casualty
insurers, specialty insurers, and financial companies worldwide, although
primarily with companies based in North America and Europe. The Committee is
aware of the unique circumstances which relate to the attraction and retention
of superior executives in Bermuda, and attempts to create and administer a
compensation program to achieve that result, while at the same time
implementing integrated compensation principles for its employees worldwide.
14
The Committee took special note this year of the significant number of new
insurance and reinsurance companies recently formed, principally in Bermuda,
which increased competition for qualified executives, and that a number of
executives left the Company since last year. In establishing compensation
levels, the Committee considered the need to provide incentives for key
employees to remain at the Company. In particular, the Committee gave a special
award, consisting of 150,000 options that vest in five years, to Dominic J.
Frederico, the Company's President and Chief Operating Officer, in addition to
his regular compensation package. This award was designed to provide a
significant financial incentive to Mr. Frederico to remain with the Company for
at least five years. The Committee believes that Mr. Frederico's contributions
are particularly valuable to the Company. Mr. Frederico's special option award
is similar to the special award given to Mr. Duperreault last year.
Equity-based retention awards were also given to a number of other officers.
Each executive's total compensation is generally comprised of three
components: salary, annual incentive compensation awards and long-term
incentive compensation awards. The mix of an officer's total compensation is
generally based upon the level of the officer's position, with more senior
officers receiving a greater percentage of their total compensation in the form
of incentive compensation (i.e., variable compensation), and a lesser
percentage in the form of salary (i.e., fixed compensation).
Salary and incentive compensation awards are reviewed annually for
competitiveness and are determined in large part by reference to compensation
levels for comparable positions at comparable companies based in the United
States, Bermuda, and Europe. Generally, the Company targets the third to upper
quartile of this peer group in establishing incentive compensation, and the
median to third quartile in establishing salaries. Actual salary may be above
or below such targets based on individual evaluations. Incentive compensation
may be above or below such targets based on individual and corporate
performance during the prior fiscal year.
In determining compensation for each senior executive, the Company hired
William M. Mercer, Incorporated (''Mercer''), an independent consulting firm
which is a subsidiary of Marsh & McLennan Companies, Inc., to assist the
Committee. In addition, the Committee directly retained Frederic W. Cook & Inc.
(''Cook''), also an independent consulting firm, to assist it with respect to
the compensation of the Chief Executive Officer and advise the Committee
regarding executive compensation practices in general. Mercer has accumulated
compensation data from a peer group of companies that ACE considers comparable
to it. The Committee took this data into consideration in determining
compensation.
Because the Company's business activities can result in significant earnings
fluctuations from year to year, each executive's contribution to the
advancement of long-term corporate goals and competitive position is also
considered. These goals include, among other things, underwriting and financial
results, revenue production, development of the management team and strategic
steps such as development of new products and lines of business, geographical
spread of business and acquisitions.
Salary
The Committee analyzed ACE's peer group data to establish competitive salary
ranges for comparable positions primarily in insurance and diversified
financial services companies of generally comparable size, market
capitalization and complexity. The Company's Chief Executive Officer makes
recommendations to the Committee with respect to the salary of each senior
executive other than himself. The Committee discusses these recommendations,
and the relevant data, and then determines the senior executives' salaries. The
Committee meets separately to determine the salary of the Company's Chief
Executive Officer.
Incentive Compensation
The Committee believes that incentive compensation, compensation that is
based on the Company's performance, plays an important role in the Company's
compensation program. At the conclusion of each fiscal year, the Committee
reviews with the Company's Chief Executive Officer the performance of each
senior
15
executive against goals established at the beginning of the year. Based upon
the overall performance of the Company and the contribution by the individuals
in achieving that performance by attaining the established goals, such as
leadership and management competencies, alignment with strategic initiatives
(including where applicable, financial performance), and development of
corporate culture, the Company's Chief Executive Officer recommends to the
Committee incentive compensation levels for each executive that reports
directly to the Chief Executive Officer, as well as for certain other senior
executives. The Committee considers his recommendations, and the relevant data,
and then determines the incentive compensation for each such executive. The
Committee meets separately to evaluate the performance of the Chief Executive
Officer and determine his incentive awards.
Annual Incentive Compensation
The Committee uses cash bonuses as its annual incentive compensation tool.
The bonus component of annual compensation provides a timely link between
Company performance and compensation. The Company's senior executives
understand that their annual compensation will be higher in a good year and
lower in a bad year. The bonus system allows the Committee to quickly adjust
annual compensation to reflect the Company's financial position as well as the
performance of individual executives. In light of the Company's financial
performance for the year ended December 31, 2001, the Committee determined to
generally decrease 2001 annual bonuses from 2000 levels.
Long-Term Incentive Compensation
The Company has established long-term incentive plans which use equity
awards to create incentives for employees to enhance the long-term value of the
Company and its competitive position. The goal of the long-term incentive plans
is to align executives' interests with long-term shareholder interests by
making equity an important component of compensation packages. In furtherance
of the objectives of these plans, the Committee established a set of goals,
including:
(i) increasing officer ownership of the Company's outstanding shares by
reviewing and establishing target levels of ownership for its officers to
achieve over time based on their respective positions with the Company and
monitoring progress towards achievement of such target levels of officer
ownership;
(ii) making long-term incentive awards at competitive levels annually
which are designed to increase officer ownership; and
(iii) providing capital accumulation opportunities that foster attraction
and retention of key management employees by linking their interests with
shareholder interests.
With respect to guidelines for administering its long-term incentive plans,
the Committee makes long-term compensation awards based on individual and
Company performance, and on the practices of ACE's group of generally
comparable insurance and diversified financial services companies. While the
long-term incentive plans provide for a range of types of awards, the Committee
has generally made awards in the form of stock options and/or restricted stock.
The Committee believes that awards of stock options, which reward Company stock
price appreciation over the long-term, are particularly appropriate in light of
the nature of the Company's business and long-term business plans. The
Committee also believes that restricted stock awards, particularly those with
delayed vesting, are crucial in helping to retain high caliber executives in an
increasingly competitive labor market.
While the Committee lowered annual incentive compensation to reflect the
Company's performance for 2001, the Committee felt it appropriate, in light of
the need to retain individuals in the current competitive environment, to
generally increase long-term equity based compensation. The Committee believes
that the level of equity based compensation it awarded is appropriate to
reflect and encourage the Company's growth prospects.
16
Chief Executive Officer's Compensation
In determining Mr. Duperreault's annual and long-term incentive awards and
adjustment to salary, the Committee reviewed, among other things, data gathered
by Mercer on the compensation of ACE's peer group and the Company's financial
performance relative to those companies and received guidance from Cook. The
Committee took into account both the challenges of the year in which the
Company, and the industry, faced its largest loss, as well as the Company's
response to the new realities of the marketplace. The Committee believes that
Mr. Duperreault was key to the Company's resiliency following the September
11/th/ tragedy. Stock price was a significant factor in the Committee's
compensation decisions, particularly the Company's stock price in comparison to
Standard & Poor's 500 Stock Index and the Standard & Poor's Property Casualty
Insurance Index. The Committee also determined that Mr. Duperreault played an
important role in the Company's successful post-September 11/th/ $1.1 billion
equity offering.
The Committee believes that Mr. Duperreault's leadership has contributed
greatly to the Company's long-term financial strength, nothwithstanding the fact
that the Company had an overall loss for the year, and that his direction and
talent are important to the Company's future prospects. The Committee therefore
felt it was appropriate to award long-term compensation to Mr. Duperreault at
the higher end of the range of comparable compensation based on data provided by
Mercer. The Committee awarded Mr. Duperreault 220,000 options, an amount equal
to the options awarded Mr. Duperreault last year, excluding the special 5-year
vesting options awarded to him last year. In addition, the Committee awarded Mr.
Duperreault 50,000 shares of restricted stock, 5,000 shares less than were
awarded last year. This award maintains the Committee's policy of making Mr.
Duperreault's long-term equity compensation a significant percentage of his
total compensation package to approximate the comparable percentage for his peer
group. This award is intended to provide appropriate incentive to retain Mr.
Duperreault's services, compensating him to the extent the Company's performance
improves. The Committee felt the levels of the long-term awards reflect Mr.
Duperreault's ability to position the Company for the future following the
challenges of 2001 and reflect the Committee's confidence in Mr. Duperreault.
The Committee believes that it is important to tie the value of the equity award
to the long-term performance of the Company's stock price. By awarding options
and restricted stock, the Committee has provided further incentive for the
Company's Chief Executive Officer to adapt to the post-September 11/th/
marketplace and position the Company for success following a very difficult
year. Long-term compensation awards such as options and restricted stock
provided the Committee with the appropriate tools to achieve this desired
result. The 220,000 options that vest over three years and the 50,000 shares of
restricted stock that vest over four years are comparable to the type of awards
made to the Company's senior executives to provide long-term incentive and to
align management with shareholders' interests.
The Committee raised Mr. Duperreault's annual salary from $925,000 for the
2001 fiscal year to $980,000 for the 2002 fiscal year to bring the salary up to
the median annual salary of his peer group. This approximately 6% increase is
in line with the salary increase from the previous year.
The Committee believes that providing variable compensation in the form of
bonuses is an important tool to reward an individual based on performance on a
year to year basis, while providing an attractive compensation package designed
to encourage retention of a valuable employee. Based on this year's
difficulties, the Committee awarded a $1,300,000 bonus to Mr. Duperreault,
which was 35% less than the $2,000,000 bonus awarded in the previous year for
the 15-month period from October 1, 1999 through December 31, 2000, or 19% less
if the previous year's bonus were prorated for 12 months of service.
Under U.S. income tax rules, Section 162(m) of the Internal Revenue Code
limits the deductibility of annual compensation in excess of $1 million paid to
the Company's Chief Executive Officer and any of the four other highest paid
officers. However, compensation is exempt from this limit if it qualifies as
''performance based compensation.'' The limit has no direct application to the
Company, because the Company is not subject to U.S. income taxes. However, if a
U.S. subsidiary has an employee who is among the five most highly compensated
officers, that subsidiary's deduction will be subject to this limit. The
Committee believes performance based
17
compensation is an important tool to provide incentive, and risk, to senior
executives, matching their compensation levels to Company performance.
Accordingly, performance based compensation comprises a significant portion of
the compensation package for senior executives. This also has the effect of
preserving the deduction for any subsidiary that might otherwise be affected by
the $1 million limit.
Although the Compensation Committee will consider deductibility under
Section 162(m) with respect to the compensation arrangements for executive
officers who may be employed by subsidiaries subject to U.S. income tax,
deductibility will not be the sole factor used in determining appropriate
levels or methods of compensation. Since Company objectives may not always be
consistent with the requirements for full deductibility, the Company and
subsidiaries may enter into compensation arrangements under which payments
would not be deductible under Section 162(m). The foregoing report has been
approved by all members of the Committee.
Bruce L. Crockett, Chairman
Robert M. Hernandez
Roberto G. Mendoza
Thomas J. Neff
Dermot F. Smurfit
Sidney F. Wentz
AUDIT COMMITTEE REPORT
The Audit Committee consists of seven members of the Board of Directors,
each of whom is independent of the Company and its management, as defined by
the New York Stock Exchange listing standards. The Audit Committee operates
under a written charter, a copy of which is attached as Exhibit A to this Proxy
Statement.
During fiscal 2001, the Audit Committee had four meetings. The meetings were
conducted so as to encourage communication among the members of the Audit
Committee, management, the internal auditors, and the Company's independent
accountants, PricewaterhouseCoopers LLP. Among other things, the Audit
Committee discussed with the Company's internal auditors and independent
accountants the overall scope and plans for their respective audits. The Audit
Committee separately met with the Company's Director of Internal Audits and the
PricewaterhouseCoopers LLP engagement partner, respectively, with and without
management present, to discuss the results of their examinations and their
evaluations of the Company's internal controls and overall financial reporting.
The Audit Committee has reviewed and discussed the Company's December 31,
2001 audited consolidated financial statements with management and with
PricewaterhouseCoopers LLP, the independent accountants of the Company.
The Audit Committee has also discussed with PricewaterhouseCoopers LLP all
the matters required to be discussed by generally accepted auditing standards
including those described in Statement of Auditing Standards No. 61. This
included a) the auditor's judgments about the quality, not just the
acceptability, of the Company's accounting principles as applied in its
financial reporting, b) methods used to account for significant unusual
transactions, c) the effect of significant accounting policies in controversial
or emerging areas for which there is a lack of authoritative guidance or
consensus, d) the process used by management in formulating particularly
sensitive accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates and e) disagreements with
management over the application of accounting principles, the basis for
management's accounting estimates, and disclosures in the financial statements.
The Audit Committee has also received from PricewaterhouseCoopers LLP the
written disclosures and the letter required by Independence Standard's Board
Standard No. 1 regarding their independence, and has
18
discussed with PricewaterhouseCoopers LLP the contents of their letter and
their independence and considered whether the provision of services referred to
under "Audit and non-audit fees billed to the Company by PricewaterhouseCoopers
LLP in 2001--financial information systems design and implementation fees and
all other fees" is compatible with maintaining their independence.
Based on the review and discussions referred to above, and in reliance on
the information, opinions, reports or statements presented to the Audit
Committee by ACE's management, its internal auditors and its independent
accountants, the Audit Committee recommended to the Board of Directors that the
December 31, 2001 audited consolidated financial statements be included in the
Company's Annual Report on Form 10-K.
Members of the 2001 Audit Committee:
Sidney F. Wentz, Chairman
Michael G. Atieh
Bruce L. Crockett
John A. Krol
Peter Menikoff
Robert Ripp
Gary M. Stuart
19
PERFORMANCE GRAPH
Set forth below is a line graph comparing the dollar change in the
cumulative total shareholder return on the Company's Ordinary Shares from
September 30, 1996 through December 31, 2001 as compared to the cumulative
total return of the Standard & Poor's 500 Stock Index and the cumulative total
return of the Standard & Poor's Property-Casualty Insurance Index. The chart
depicts the value on September 30, 1997, September 30, 1998, September 30,
1999, December 31, 2000 and December 31, 2001 of a $100 investment made on
September 30, 1996, with all dividends reinvested.
[CHART]
ACE Limited S&P 500 S&P Property-Casualty
Insurance Index
9/30/96 $100 $100 $100
9/30/97 $178 $138 $152
9/30/98 $170 $148 $138
12/31/99 $95 $214 $104
12/31/00 $241 $192 $161
12/31/01 $228 $167 $146
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Item B on Proxy Card)
The appointment of independent accountants is approved annually by the Board
of Directors and ratified by the Company's shareholders. The decision of the
Board of Directors is based on the recommendation of the Audit Committee. In
making its recommendation, the Audit Committee reviews both the audit scope and
estimated fees for professional services for the coming year. The Board of
Directors has authorized the engagement of PricewaterhouseCoopers LLP as the
Company's independent accountants for the year ending December 31, 2002. The
Company has had a working association with PricewaterhouseCoopers LLP since
1985; PricewaterhouseCoopers LLP has had the responsibility for examining the
consolidated financial statements of the Company and its subsidiaries since
1985.
Representatives of PricewaterhouseCoopers LLP will attend the Annual General
Meeting and will have an opportunity to make a statement if they wish. They
will also be available to answer questions at the meeting.
The Company's recently appointed Chief Financial Officer was the
partner-in-charge of the New York Regional Insurance Practice of
PricewaterhouseCoopers LLP prior to joining the Company at the beginning of
2002. He did not participate in the audit of the Company while at
PricewaterhouseCoopers LLP.
20
Audit and non-audit fees billed to the Company by PricewaterhouseCoopers LLP in
2001
The following table presents fees for professional audit services rendered
by PricewaterhouseCoopers LLP for the audit of the Company's annual
consolidated financial statements for 2001, and fees billed for other services
rendered by PricewaterhouseCoopers LLP for fiscal 2001:
Audit fees (a).................................................. $4,430,000
==========
Financial information systems design and implementation fees (b) $6,609,000
==========
All other fees
Statutory, subsidiary and other regulatory audits............ $1,691,000
Non-financial information systems design and implementation.. $2,466,000
Assurance services (c)....................................... $ 673,000
Tax advice and compliance.................................... $ 602,000
Other non-audit services..................................... $ 312,000
Total other fees................................................ $5,744,000
==========
- --------
(a) Audit fees represent the aggregate fees, including expenses reimbursed,
billed by PricewaterhouseCoopers LLP for the audit of the Company's annual
consolidated financial statements and review of the consolidated financial
statements included in the Company's quarterly reports on Form 10-Q, all
for the year ended December 31, 2001.
(b) Consulting services for enterprise-wide financial information systems;
(c) Assurance services include services provided with respect to registration
statements as well as assistance in investigative work carried out by the
Company.
All non-audit services were reviewed with the Audit Committee, which
concluded that the provision of such services by PricewaterhouseCoopers LLP was
compatible with the maintenance of that firm's independence in the conduct of
its auditing functions.
THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE APPOINTMENT OF THE
INDEPENDENT ACCOUNTANTS.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
If you wish to submit a proposal to be considered for inclusion in the proxy
material for the next annual meeting, please send it to the Secretary, ACE
Limited, ACE Global Headquarters 17 Woodbourne Avenue, Hamilton HM 08 Bermuda.
Under the rules of the Securities and Exchange Commission, proposals must be
received no later than December 16, 2002 and otherwise comply with the
requirements of the U.S. Securities and Exchange Commission to be eligible for
inclusion in the Company's 2003 Annual General Meeting proxy statement and form
of proxy.
The Company's Articles provide that if a shareholder desires to submit a
proposal for consideration at an annual general meeting, or to nominate persons
for election as directors, written notice of such shareholder's intent to make
such a proposal or nomination must be given and received by the Secretary of
the Company at the principal executive offices of the Company no later than 60
days prior to the anniversary date of the immediately preceding annual general
meeting. With respect to the 2003 Annual General Meeting, such written notice
must be received on or prior to March 17, 2003. The notice must meet the
requirements set forth in the Company's Articles. Under the circumstances
described in, and upon compliance with, Rule 14a-4(c) under the Exchange Act,
management proxies would be allowed to use their discretionary voting authority
to vote on any proposal with respect to which the foregoing requirements have
been met.
21
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company.
Solicitation will be made by mail, and may be made by directors, officers and
employees, personally or by telephone or facsimile. Proxy cards and materials
also will be distributed to beneficial owners of Ordinary Shares through
brokers, custodians, nominees and other parties, and the Company expects to
reimburse such parties for their charges and expenses. Georgeson Shareholder
has been retained to assist the Company in the solicitation of proxies at a fee
estimated not to exceed $8,000, plus out-of-pocket expenses.
OTHER MATTERS
The Board of Directors of the Company does not know of any matters which may
be presented at the Annual General Meeting other than those specifically set
forth in the Notice of Annual General Meeting. If any other matters come before
the meeting or any adjournment thereof, the persons named in the accompanying
form of proxy and acting thereunder will vote in accordance with their best
judgment with respect to such matters.
By Order of the Board of Directors,
Brian Duperreault
Chairman and Chief Executive Officer
22
EXHIBIT A
ACE LIMITED
AUDIT COMMITTEE CHARTER
JUNE 2000
PURPOSE OF THE AUDIT COMMITTEE
. The Audit Committee was established by the Board of Directors to provide
oversight of the financial reporting process, the system of internal
controls, the audit process, the performance of the Company's internal
auditors and the performance and independence of the independent
accountants.
. The Company's independent accountants shall have ultimate accountability
to the Audit Committee and the Board of Directors.
AUTHORITY OF THE AUDIT COMMITTEE
. The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee.
. The Audit Committee may request any officer or employee of the Company
or the Company's outside counsel or independent accountant to attend a
meeting of the Committee or to meet with any members of, or consultants
to, the Committee.
AUDIT COMMITTEE COMPOSITION
. The committee shall consist of at least five directors, including a
chairman, each selected from the Board of Directors by the Board of
Directors.
. Each member of the Audit Committee shall be ''independent'' as defined
under applicable U.S. Securities and Exchange Commission and New York
Stock Exchange rules.
. Each member of the Audit Committee shall have such level of experience
and expertise in accounting, financial and related matters, as
determined by the Board of Directors, as shall enable him or her to
effectively fulfill his or her duties as a member of the Audit Committee
and to comply with applicable U.S. Securities and Exchange Commission
and New York Stock Exchange rules.
ROLES AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
General
. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
. If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist.
. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent accountants in separate
executive sessions.
. Perform other oversight functions as requested by the full board.
Internal Controls and Internal Audit
. Review the adequacy of the Company's internal control structure.
. Review the activities, organizational structure and qualifications of
the internal audit function.
. Review the appointment and replacement of the senior internal auditing
executive.
A-1
Independent Audit and Independent Accountants
. Review the independent accountants' proposed audit scope and approach.
. Review and approve the independent accountants' fee arrangements.
. Recommend appointment of the independent accountants.
. Evaluate together with the Board the performance of the independent
accountants and, if so determined by the Audit Committee, recommend that
the Board replace the independent accountants.
. Receive on a periodic basis from the independent accountants a formal
written statement delineating all relationships between the independent
accountants and the Company.
. Actively engage in a dialogue with the independent accountants with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the independent accountants.
. Recommend that the Board of Directors take appropriate action, as
necessary, in response to the independent accountants' report to satisfy
itself of the independent accountants' independence.
. Discuss with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
. Review with the independent accountants any problems or difficulties the
accountants may have encountered and any management letter provided by
the accountants and the Company's response to that letter.
Financial Statement Review
. Conduct a review of the annual financial statements, including
Management's Discussion and Analysis, and audit findings, including any
significant suggestions for improvements provided to management by the
independent accountants.
. Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements, and understand their impact
on the financial statements.
. Review major changes to the Company's auditing and accounting principles
and practices as suggested by management, the independent accountants or
internal auditors.
Compliance Issues
. Review the Company's policies and procedures regarding compliance with
the Company's Code of Conduct.
. Review with the Company's counsel legal matters that may have a material
impact on the financial statements.
REPORTING RESPONSIBILITIES
. The committee shall keep a record of its proceedings.
. The committee shall report to the Board of Directors at the next
Directors meeting.
. The committee shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the Company's
annual proxy statement.
A-2
ACE LIMITED
c/o P.O. BOX 3543
South Hackensack, NJ 07606-9243
PROXY
-----
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brian Duperreault, Dominic Frederico and Peter
Mear as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated below, all the
Ordinary Shares of ACE Limited which the undersigned is entitled to vote at the
Annual General Meeting to be held on May 16, 2002 or any adjournment thereof.
Address Change and/or Comments Mark Here
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
(Continued on Reverse)
You can now access your ACE Limited account online.
Access your ACE Limited shareholder account online via Investor
ServiceDirect/SM/ (ISD).
Mellon Investor Services LLC, agent for ACE Limited, now makes it easy and
convenient to get current information on your shareholder account. After a
simple, and secure process of establishing a Personal Identification Number
(PIN), you are ready to log in and access your account to:
. View account status
. View certificate history
. View book-entry information
. View payment history for dividends
. Make address changes
. Obtain a duplicate 1099 tax form
. Establish/change your PIN
Visit us on the web at http://www.melloninvestor.com
and follow the instructions shown on this page.
Step 1: FIRST TIME USERS - Establish a PIN
You must first establish a Personal Identification Number (PIN) online by
following the directions provided in the upper right portion of the web screen
as follows. You will also need your Social Security Number (SSN) available to
establish a PIN.
Investor ServiceDirect/SM/ is currently only available for domestic individual
and joint accounts.
. SSN
. PIN
. Then click on the Establish PIN button
Please be sure to remember your PIN, or maintain it in a secure place for future
reference.
Step 2: Log in for Account Access
You are now ready to log in. To access your account please enter your:
. SSN
. PIN
. Then click on the Submit button
If you have more than one account, you will now be asked to select the
appropriate account.
Step 3: Account Status Screen
You are now ready to access your account information. Click on the appropriate
button to view or initiate transactions.
. Certificate History
. Book-Entry Information
. Issue Certificate
. Payment History
. Address Change
. Duplicate 1099
For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time
- --------------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder.
If no direction is made, this proxy will be voted for the appointment of Dominic
J. Frederico, Donald Kramer, John A. Krol, Roberto G. Mendoza and Walter A.
Scott as directors of ACE Limited to serve three-year terms to expire at the
Annual General Meeting in 2005 and the ratification of the appointment of
PricewaterhouseCoopers LLP as the independent accountants of the Company.
A. Election of Directors
For Election to Term Expiring in 2005: 01 Dominic J. Frederico,
02 Donald Kramer, 03 John A. Krol, 04 Roberto G. Mendoza and 05 Walter A. Scott
For _________ Withheld _________ Exceptions _________
To vote your shares for all Director nominees, mark the "For" box on Item A. To
withhold voting for all nominees, mark the "Withheld" box. If you do not wish
your shares voted "For" a particular nominee, mark the "Exceptions" box and
enter the name(s) of the exception(s) in the space provided.
- --------------------------------------------------------------------------------
B. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants of ACE Limited for the fiscal year ending December
31, 2002.
For _________ Against _________ Abstain _________
In their discretion, the Proxies are authorized to vote upon such other further
business, if any, as lawfully may be brought before the meeting.
If you have either an Address Change or Comments on the other side of the card,
mark here ___.
Signature _______________________ Signature __________________ Date _________
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership or limited liability company, please sign in partnership or limited
liability company name by authorized person.
- --------------------------------------------------------------------------------
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 4PM Eastern Time the business
day prior to the annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
Internet
http://www.eproxy.com/ace
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
OR
Mail
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail
back your proxy card.