1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Rule 14a-11(c) or Rule 14a-12
PXRE GROUP LTD
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
(PXRE LOGO)
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 12, 2001
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of
PXRE GROUP LTD. ("PXRE") will be held on June 12, 2001 commencing at 9:00 a.m.,
local time, at the offices of PXRE, 99 Front Street, Hamilton HM 12, Bermuda for
the following purposes:
(1) To elect three members of the Board of Directors who, with the six
other directors whose terms of office do not expire at this meeting, will
constitute the full Board, as described in the Proxy Statement dated April
27, 2001 accompanying this Notice of Annual General Meeting (the "Proxy
Statement"); and
(2) To approve the recommendation of the Board of Directors that KPMG
("KPMG") be appointed as the Company's independent auditors for the fiscal
year ending December 31, 2001 and to refer the determination of the
auditors' remuneration to the Board of Directors.
Only holders of the Common Shares of PXRE at the close of business on April
13, 2001, as shown by the transfer books of PXRE, are entitled to notice of, and
to vote at, this Annual General Meeting and any adjournments thereof.
By Order of the Board of Directors
DAVID J. DOYLE, Secretary
Hamilton, Bermuda
April 27, 2001
- --------------------------------------------------------------------------------
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THIS ANNUAL GENERAL MEETING IN
PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY AT THEIR EARLIEST CONVENIENCE.
ANY PROXY GIVEN MAY BE REVOKED BY SUBMITTING, AT LEAST TWO (2) HOURS PRIOR TO
THE COMMENCEMENT OF THE ANNUAL GENERAL MEETING, EITHER A WRITTEN NOTICE OF SUCH
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE TO PXRE AT ITS MAILING
ADDRESS, SUITE 231, 12 CHURCH STREET, HAMILTON HM 11, BERMUDA, ATTN: SECRETARY.
ATTENDANCE AT THE ANNUAL GENERAL MEETING BY A SHAREHOLDER WHO HAS GIVEN A PROXY
SHALL NOT IN AND OF ITSELF CONSTITUTE A REVOCATION OF SUCH PROXY.
- --------------------------------------------------------------------------------
IMPORTANT: PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
3
PROXY STATEMENT
---------------------
ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF PXRE GROUP LTD.
JUNE 12, 2001
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of PXRE GROUP LTD., 99 Front Street, Hamilton HM 12,
Bermuda ("PXRE"), of proxies from the holders of PXRE's common shares, par value
$1.00 per share (the "Common Shares") for use at the Annual General Meeting of
Shareholders to be held on June 12, 2001 and at any and all adjournments thereof
(the "Annual Meeting"). Common Shares represented at the Annual Meeting by a
properly executed and returned Proxy will be voted at the Annual Meeting in
accordance with the instructions noted thereon, or if no instructions are noted,
the Proxy will be voted in favor of the proposals set forth in the Notice of
Annual Meeting. Any Proxy given may be revoked by submitting, at least two (2)
hours prior to the commencement of the Annual Meeting, either a written notice
of such revocation or a duly executed Proxy bearing a later date to PXRE at its
mailing address, Suite 231, 12 Church Street, Hamilton HM 11, Bermuda, Attn:
Secretary. Attendance at the Annual Meeting by a shareholder who has given a
Proxy shall not in and of itself constitute a revocation of such Proxy.
The Annual Meeting will be the second annual general meeting of PXRE, a
Bermuda company, since it became the parent holding company of PXRE Corporation,
a Delaware corporation ("PXRE Delaware"), in October 1999 and succeeded to the
holding company functions previously conducted by PXRE Delaware. In connection
with the October 1999 reorganization, each share of PXRE Delaware common stock
owned by stockholders was automatically converted into and became one PXRE
Common Share; PXRE Delaware's stock plans and other employee and director
benefit plans were revised or amended to reflect the reorganization, including
providing for future use of PXRE Common Shares in lieu of PXRE Delaware common
stock thereunder; the directors who were serving as directors of PXRE Delaware
became directors of PXRE; and Messrs. Gerald L. Radke (Chairman, President and
Chief Executive Officer) and James F. Dore (Executive Vice President, Treasurer
and Chief Financial Officer) who were executive officers of PXRE Delaware and
David J. Doyle (Secretary) became officers of PXRE. Accordingly, except where
the context otherwise requires, references herein to PXRE include its
predecessor, PXRE Delaware.
The mailing address of PXRE is Suite 231, 12 Church Street, Hamilton HM 11,
Bermuda. The Notice of Annual General Meeting of Shareholders, this Proxy
Statement and the accompanying Proxy were first transmitted to shareholders of
PXRE on or about April 27, 2001.
The cost of preparing, assembling and mailing this Proxy Statement and the
material enclosed herewith is being borne by PXRE. Directors, officers and
employees of PXRE may solicit Proxies orally or in writing, without additional
compensation. PXRE's regularly retained investor relations firm, Corporate
Communications Inc., may also be called upon to solicit Proxies by telephone or
by mail. PXRE will reimburse brokers, fiduciaries and custodians for their costs
in forwarding proxy materials to beneficial owners of Common Shares held in
their names.
4
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 13, 2001 as
the record date (the "Record Date") for the determination of shareholders
entitled to receive notice of, and to vote at, the Annual Meeting. As of the
Record Date, 11,903,782 Common Shares were issued and outstanding and held of
record by approximately 1,300 shareholders. Each Common Share entitles the
holder thereof to one vote on each matter to be voted upon at the Annual
Meeting, except that if a person constructively or beneficially, directly or
indirectly, owns more than 9.9% of the voting power of the outstanding Common
Shares, the voting rights with respect to such shares will be limited, in the
aggregate, to voting power of 9.9%, as specified in PXRE's Bye-Laws. The
presence at the meeting in person or by proxy of the holders of a majority of
the outstanding Common Shares (giving effect to the limitation on voting
referred to above) is necessary to constitute a quorum for the transaction of
business at the Annual Meeting.
All matters referenced in this Proxy Statement upon which the shareholders
will be asked to consider and vote upon will, in accordance with PXRE's
Bye-Laws, be decided by an ordinary resolution, that is, a resolution passed by
a simple majority of votes cast in person or by proxy at the meeting. A
resolution put to the vote of the meeting will be decided on by a show of hands,
unless a poll has been demanded pursuant to PXRE's Bye-Laws. On matters to be
decided by ordinary resolution, shares represented at the meeting whose votes
are withheld on any matter, shares which are represented by "broker non-votes"
(i.e., shares held by brokers or nominees which are represented at the meeting
but with respect to which the broker or nominee is not empowered to vote on a
particular proposal) and the shares which abstain from voting on any particular
matter are not included in the tabulation of the shares voting on such matter
but are counted for quorum purposes. If a broker holds Common Shares in "street
name", the broker may vote such Common Shares on the two matters being presented
to the Annual General Meeting even if the broker does not receive instructions
from the shareholder.
The following table indicates those persons known to PXRE (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) who own beneficially more than 5% of
PXRE's Common Shares as of the Record Date:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
Common Shares Phoenix Home Life Mutual........................ 1,131,700 shares(1) 9.5%
Insurance Company
One American Row
Hartford, CT 06115
Common Shares Select Reinsurance Ltd.......................... 1,112,200 shares(2) 9.3%
Corner House
20 Parliament Street, 4th Floor
Hamilton, HM 12 Bermuda
Common Shares DePrince, Race & Zollo, Inc..................... 1,156,900 shares(3) 9.7%
201 S. Orange Avenue
Suite 850
Orlando, FL 32801
2
5
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
Common Shares Royce & Associates, Inc......................... 1,166,260 shares(4) 9.7%
and Affiliates
1414 Avenue of the Americas
New York, NY 10019
Common Shares FMR Corp. and Affiliates........................ 1,181,063 shares(5) 9.8%
82 Devonshire Street
Boston, MA 02109
Common Shares SAB Capital Advisors, L.L.C..................... 714,000 shares(6) 6.0%
and Affiliates
650 Madison Avenue
26th Floor
New York, NY 10022
- ---------------
(1) According to the Schedule 13G and Form 4 filed with the Securities and
Exchange Commission (the "Commission") by Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life"), Phoenix Home Life may be deemed to
beneficially own the 1,131,700 Common Shares indicated opposite Phoenix Home
Life's name in the above table. Phoenix Home Life reports sole voting power
and sole dispositive power in respect of the 1,131,700 Common Shares.
(2) According to the Schedule 13G filed with the Commission by Select
Reinsurance Ltd. ("Select Re"), Select may be deemed to beneficially own the
1,112,200 Common Shares indicated opposite Select Re's name in the above
table. Select Re reports sole voting power and sole dispositive power in
respect of the 1,112,200 Common Shares, except that voting and dispositive
power is exercised through Select Re's sole investment advisor Mariner
Investment Group, Inc. ("Mariner") and accordingly may be deemed to share
voting and dispositive power. Select Re also reports that Mr. William
Michaelcheck is 100% shareholder of Mariner and Chairman of the Board of
Select Re.
(3) According to the Schedule 13G filed with the Commission by DePrince, Race &
Zollo, Inc. ("DePrince"), DePrince may be deemed to beneficially own the
1,156,900 Common Shares indicated opposite DePrince's name in the above
table. DePrince reports sole voting and sole dispositive power in respect of
the 1,156,900 Common Shares.
(4) According to the Schedule 13G filed with the Commission by Royce &
Associates, Inc., Royce Management Company and Charles M. Royce, as a group,
Royce Management Company and Charles M. Royce may be deemed to beneficially
own the 1,166,260 Common Shares indicated opposite their name in the above
table, by virtue of Royce & Associates, Inc.'s ownership of 1,162,460 Common
Shares, as to which it is reported to possess sole voting and dispositive
power, and by virtue of Royce Management Company's ownership of 3,800 Common
Shares, as to which it is reported to possess sole voting and dispositive
power. The group reports that Mr. Royce may be deemed to beneficially own
the Common Shares beneficially owned by Royce & Associates, Inc. and Royce
Management Company but disclaims beneficial ownership of such Common Shares.
(5) According to the Schedule 13G filed with the Commission by FMR Corp. ("FMR")
and various affiliates thereof, FMR, Mr. Edward C. Johnson 3d, Abigail P.
Johnson and other members of the Johnson family may be deemed to
beneficially own the 1,181,063 Common Shares indicated opposite FMR's name
in the above table, by virtue of FMR's 100% ownership of Fidelity Management
& Research Company ("Fidelity"). Fidelity, in its capacity as a registered
investment advisor to Fidelity
3
6
Low Priced Stock Fund may be deemed to be the beneficial owner of such
1,181,063 Common Shares. Neither FMR, Mr. Johnson nor Ms. Johnson reports
sole or shared voting power in respect of the 1,181,063 Common Shares. Each
of FMR, Mr. Johnson and Ms. Johnson reports sole dispositive power in
respect of the 1,181,063 Common Shares.
(6) According to the Schedule 13G filed with the Commission by SAB Capital
Advisors, L.L.C. ("SABCA"), SAB Capital Partners, L.P. ("SABCPI"), SAB
Capital Partners II, L.P. (SABCPII"), SAB Capital Management, L.L.C.
("SABCM"), SAB Overseas Capital Management, L.P. ("SABOCM") and Scott A.
Bommer, as a group (collectively, "SAB"), SAB may be deemed to beneficially
own the 714,000 Common Shares indicated opposite their name in the above
table by virtue of SABCPI's ownership of 657,611 Common Shares and SABCPII's
ownership of 9,561 Common Shares, as to which SABCA is reported to exercise
shared voting and dispositive power for said 667,172 Common Shares, and
SABOCM's ownership of 46,828 Common Shares, as to which SABCM is reported to
possess shared voting and dispositive power for said 46,828 Common Shares.
SAB reports that Mr. Bommer may be deemed to beneficially own and exercise
shared voting and dispositive power with respect to the 714,000 Common
Shares beneficially held by SAB.
To PXRE's knowledge, no other person owns of record or beneficially more
than 5% of the outstanding Common Shares as of the Record Date.
NOMINEES FOR ELECTION AS DIRECTORS
PXRE's Bye-Laws provide for the election of directors by the shareholders.
In accordance with the Bye-Laws, PXRE's Board of Directors is divided into three
classes (Classes I, II and III) as nearly equal in number as possible. The terms
of office of the members of one class expire and a successor class is elected at
each annual general meeting of the shareholders.
At the Annual Meeting, the terms of office of the Class III directors will
terminate. Therefore, the Board of Directors has nominated F. Sedgwick Browne,
Bernard Kelly and David W. Searfoss (all of whom are also presently serving on
the Board) for re-election as Class III directors to serve three-year terms
until the annual general meeting of shareholders is held in 2004 and until their
successors have been elected and qualified. It is intended that Proxies will be
voted in favor of these persons. If, for any reason, any of the nominees is not
able or willing to serve as a director when the election occurs (a situation
which is not presently contemplated), it is intended that the Proxies will be
voted for the election of a substitute nominee in accordance with the judgment
of the Proxy holder.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION
OF THE THREE NOMINEES FOR DIRECTOR NAMED ABOVE.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The following are the directors of PXRE:
Gerald L. Radke (56) has been the President, Chief Executive Officer
and a director of PXRE (and its predecessor PXRE Delaware) since 1986 (and
its Chairman of the Board of Directors since June 1995). From August 1993
until the merger (the "Merger") in December 1996 of Transnational Re
Corporation ("TREX") with and into PXRE Delaware, Mr. Radke also served as
President, Chief Executive Officer and Chairman of the Board of Directors
of TREX.
4
7
F. Sedgwick Browne (58) is a senior counsel at Morgan, Lewis & Bockius
LLP (law firm), specializing in the insurance and reinsurance industry.
Prior to becoming a partner of Morgan, Lewis & Bockius LLP on October 1,
1994, he was a partner of Lord Day & Lord, Barrett Smith. Mr. Browne was
elected a director of PXRE Delaware in June 1999.
Robert W. Fiondella (58) has been Chairman of the Board of Directors,
President and Chief Executive Officer of Phoenix Home Life since February
1994. From July 1992 to February 1994, he was President and Principal
Operating Officer of Phoenix Home Life, and from February 1989 to June
1992, he was President and Chief Operating Officer of Phoenix Mutual Life
Insurance Company, a predecessor of Phoenix Home Life ("Phoenix Mutual").
Mr. Fiondella is also a director of Phoenix Charter Oak Trust Company, a
well as an officer and director of various other Phoenix Home Life
subsidiaries. Mr. Fiondella is also a director of Hilb, Rogal and Hamilton,
an insurance brokerage firm.
Franklin D. Haftl (66), who was elected a director of PXRE Delaware in
February 1997, has been in the insurance and reinsurance industry since
1958. He served as President and Chief Executive Officer of Unione Italiana
Reinsurance Company of America, Inc. from October 1988 to March 1994. Mr.
Haftl served as a director of TREX from January 1994 until the Merger in
December 1996. Mr. Haftl is a certified arbiter member of the American
Arbitration Association and has served and continues to serve as an umpire
on numerous arbitration panels adjudicating commercial insurance and
reinsurance related disputes.
Bernard Kelly (71), who was elected a director of PXRE Delaware in
December 1988, is a U.K. attorney and Chairman of Bernard Kelly &
Associates, a financial consultant, and was formerly Vice Chairman and
Managing Director of Lazard Brothers & Co. Ltd., London. Mr. Kelly also is
a director of a number of companies, including PXRE Ltd. (a corporate
member of Lloyd's) and Societe Generale d'Investissements SA, a quoted
Luxembourg industrial holding company, PXP International Ltd., a U.K.
subsidiary of Phoenix Investment Partners, and is also Chairman of
Langbourne Income Growth & Property Unit Trust and Nexus Structured Finance
Ltd., an agency for private sector finance to state U.K. institutions.
Halbert D. Lindquist (55), was appointed by the Board of Directors in
November 2000 to fill the casual vacancy that arose upon the retirement of
Mr. Wilson Wilde from the Board. Mr. Lindquist is the Senior Investment
Officer for Blackstone Alternative Asset Management, where he is
responsible for managing a $1.5 billion fund of funds hedge fund portfolio.
Mr. Lindquist is also a principal of Tucson Asset Management, Inc. and
Presidio Securities, Inc.
Wendy Luscombe (49), who was elected a director of PXRE Delaware in
November 1993, has been a principal of WKL Associates, a company which
provides U.S. real estate investment advisory services to U.K. companies,
since May 1994. Ms. Luscombe is also principal real estate advisor to
Prudential Portfolio Managers America Limited. Ms. Luscombe was also a
director of Berkeley Commercial Investments, the commercial real estate
investment arm of Berkeley Group plc, a U.K. public company, until June
1996.
Philip R. McLoughlin (54) has been Chairman, Chief Executive Officer
and a director of Phoenix Investment Partners, formerly Phoenix Duff &
Phelps Corporation ("Phoenix Investment Partners") since October 1995.
Phoenix Investment Partners is an investment management company and a
subsidiary of Phoenix Home Life. Since July 1992, Mr. McLoughlin has also
been Executive Vice President and Chief Investment Officer of Phoenix Home
Life. From December 1988 to June 1992, he was Executive Vice President,
Investments of Phoenix Mutual. Mr. McLoughlin is currently president
5
8
and a director or trustee of 31 registered investment companies which are
affiliated with Phoenix Home Life, a director of both World Trust and
Emerging World Trust, each a Luxembourg organized investment trust, and
Phoenix Charter Oak Trust Company, as well as a director and officer of
various other Phoenix Home Life subsidiaries.
David W. Searfoss (50) has been Executive Vice President and Chief
Financial Officer of Phoenix Home Life since October 1994. From July 1992
to October 1994, he was Senior Vice President and Chief Financial Officer
of Phoenix Home Life, and from November 1987 to June 1992, he was Senior
Vice President and Chief Financial Officer of Phoenix Mutual. Mr. Searfoss
has served as a director of PXRE since December 1987. Mr. Searfoss is also
an officer and director of various Phoenix Home Life subsidiaries and is a
director of Hilb, Rogal and Hamilton.
Unless otherwise indicated, all directors have served in such capacity with
PXRE since its organization in August 1999 and with its predecessor, PXRE
Corporation, since 1986.
In addition to the executive officer listed as being a director, PXRE has
the following executive officers:
James F. Dore (55) is Executive Vice President, Treasurer and Chief
Financial Officer of PXRE and has been such since June 1999. Prior thereto,
Mr. Dore was Senior Vice President -- Financial Market Products for
Employers Reinsurance Corporation. Before assuming responsibility for
Financial Market Products, Mr. Dore was Chief Financial Officer of
Employers Reinsurance Corporation, prior to which he was Chief Financial
Officer of GE Capital Mortgage Corporation.
Michael J. Bleisnick (49) is Executive Vice President -- London Market
Operations and has been an Executive Vice President of PXRE since March
1993. Prior thereto, he was a Senior Vice President of PXRE. From August
1993 until the Merger in December 1996, Mr. Bleisnick also served as an
Executive Vice President of TREX.
Gordon Forsyth, III (53) is Executive Vice President -- North American
Operations and Chief Underwriting Officer for Traditional Products and has
been an Executive Vice President of PXRE since March 1993. Prior thereto,
he was a Senior Vice President of PXRE. From August 1993 until the Merger
in December 1996, Mr. Forsyth also served as an Executive Vice President of
TREX.
Charles B. Penruddocke (57) is Managing Director and Executive Vice
President -- International Operations and has been an Executive Vice
President of PXRE since June 1998. Prior thereto, he was Senior Vice
President -- International Operations at F&G Re, the reinsurance arm of the
USF&G Group.
Jeffrey L. Radke (32) is Executive Vice President of PXRE and
President of PXRE Reinsurance Ltd. and has been such since January 2000.
Prior thereto, Mr. Radke served as President of Select Re. From 1996 to
1998, he was Senior Vice President -- Capital Markets Products of CAT
Limited, prior to which he was a Vice President of Guy Carpenter & Company,
a reinsurance brokerage firm. Jeffrey Radke is Gerald Radke's son.
Michael J. Toman (50) is Executive Vice President -- Direct
Reinsurance and has been an Executive Vice President of PXRE since June
1998. Prior thereto, he was a Senior Vice President at General Reinsurance
Corporation, where he was responsible for treaty underwriting operations.
Before General Reinsurance Corporation purchased National Reinsurance
Corporation, Mr. Toman had been in charge of National Reinsurance
Corporation's treaty underwriting division.
All executive officers of PXRE hold office at the pleasure of the Board of
Directors.
6
9
The following table sets forth certain information concerning beneficial
ownership of PXRE's Common Shares by the directors, the five executive officers
named below under the heading "EXECUTIVE COMPENSATION" and all directors and
executive officers as a group, as of the Record Date:
SHARES (AND PERCENT) DIRECTOR
DIRECTORS AND FIVE CURRENT NAMED EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) TERM ENDS
- --------------------------------------------------- --------------------- ---------
Gerald L. Radke...................................... 223,093(2) 2002
F. Sedgwick Browne................................... 25,325(3)* (4)
Robert W. Fiondella.................................. 29,722(3)* 2003
Franklin D. Haftl.................................... 21,365(3)* 2002
Bernard Kelly........................................ 28,691(3)* (4)
Halbert D. Lindquist................................. 4,325(3)* 2003
Wendy Luscombe....................................... 24,222(3)* 2002
Philip R. McLoughlin................................. 22,853(3)* 2003
David W. Searfoss.................................... 28,155(3)* (4)
Michael J. Bleisnick................................. 90,649(5)* --
James F. Dore........................................ 34,670(6)* --
Gordon Forsyth, III.................................. 103,870(7)* --
Michael J. Toman..................................... 52,548(8)* --
All directors and executive officers as a group
(15 persons)....................................... 771,308(9)
- ---------------
* Beneficially owns less than 1% of PXRE's issued and outstanding Common
Shares.
(1) The number of Common Shares set forth opposite the names of Mr. Browne, Mr.
Haftl, Mr. Kelly, Mr. Lindquist and Ms. Luscombe does not include the 2,000
shares granted to each such director under the PXRE Director Deferred Stock
Plan (described below under the heading "THE BOARD OF DIRECTORS AND ITS
COMMITTEES AND DIRECTOR COMPENSATION"), as to which shares such directors
currently hold neither voting nor investment power. Pursuant to the terms of
the Director Deferred Stock Plan, on each date that dividends are paid to
shareholders in respect of the Common Shares, PXRE makes dividend equivalent
payments, in cash, in respect of each Common Share granted, but not yet
delivered, under such Plan.
(2) Mr. Radke beneficially owns 1.87% of PXRE's issued and outstanding Common
Shares. The number of Common Shares set forth opposite Mr. Radke's name
includes currently exercisable options to purchase 118,989 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, such Common Shares
for which Mr. Radke holds currently exercisable options have been added to
the total number of issued and outstanding Common Shares solely for the
purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Radke.
(3) Includes with respect to each of the following individuals, currently
exercisable options to purchase the indicated number of Common Shares: Mr.
Browne, 12,182 shares; Mr. Fiondella, 28,222 shares; Mr. Haftl, 19,730
shares; Mr. Kelly, 23,378 shares; Mr. Lindquist, 4,325 shares; Ms. Luscombe,
23,072 shares; Mr. McLoughlin, 20,686 shares; and Mr. Searfoss, 26,055
shares. In accordance with Rule 13d-3(d)(1) under the Exchange Act, such
Common Shares for which the named director holds currently exercisable
options have been added to the total number of issued and outstanding Common
Shares solely for the purpose of calculating the percentage of such total
number of issued and outstanding Common Shares beneficially owned by such
director.
(4) Term of office of Class III directors terminates at the forthcoming 2001
Annual Meeting.
7
10
(5) Includes currently exercisable options to purchase 64,128 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 64,128 Common
Shares for which Mr. Bleisnick holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Bleisnick.
(6) Includes currently exercisable options to purchase 12,500 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 12,500 Common
Shares for which Mr. Dore holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Dore.
(7) Includes currently exercisable options to purchase 66,651 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 66,651 Common
Shares for which Mr. Forsyth holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Forsyth.
(8) Includes currently exercisable options to purchase 12,500 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 12,500 Common
Shares for which Mr. Toman holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Toman.
(9) The directors and executive officers as a group beneficially own 6.5% of
PXRE's outstanding Common Shares. The number of shares includes currently
exercisable options to purchase 466,012 Common Shares. In accordance with
Rule 13d-3(d)(1) under the Exchange Act, such Common Shares for which PXRE's
directors and executive officers as a group hold currently exercisable
options have been added to the total number of issued and outstanding Common
Shares solely for the purpose of calculating the percentage of such total
number of issued and outstanding Common Shares beneficially owned by such
directors and executive officers as a group.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
AND DIRECTOR COMPENSATION
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 2000, the Board of Directors of PXRE met six (6) times. No director
attended fewer than 75% of the aggregate of (i) the total number of Board
meetings (held when such person was a director) and (ii) the total number of
meetings held by the standing committees on which he or she served (during the
periods that he or she served).
There are four standing committees of the Board of Directors: the Audit
Committee, the Human Resources Committee, the Investment Committee and the
Executive Committee. The committees are composed entirely of directors who are
not employees of PXRE, except for Mr. Radke who is a member of the Executive
Committee.
The members of the Audit Committee are Messrs. Kelly (Chairman), Browne,
Haftl, McLoughlin and Searfoss. The members of the Audit Committee are
responsible for assisting the Board of Directors in fulfilling its
responsibilities in connection with PXRE's accounting and financial reporting
practices. In 2000, the Audit Committee met three (3) times.
8
11
The members of the Human Resources Committee are Messrs. Fiondella
(Chairman), Haftl, Lindquist and Searfoss and Ms. Luscombe. The Human Resources
Committee performs the functions of a compensation committee, including the
administration of PXRE's various stock option and other compensation plans. In
2000, the Human Resources Committee met three (3) times.
The members of the Investment Committee are Ms. Luscombe (Chairwoman) and
Messrs. Browne, Kelly, Lindquist and McLoughlin. The members of the Investment
Committee are responsible for monitoring and approving the investment policies
and the investments of PXRE and its reinsurance and trading subsidiaries,
including PXRE Reinsurance Company ("PXRE Reinsurance") and PXRE Reinsurance
Ltd. ("PXRE Bermuda"), and for overseeing investment management carried out by
Phoenix Investment Partners and by Mariner. In 2000, the Investment Committee
met two (2) times.
The members of the Executive Committee are Messrs. Gerald Radke and
Fiondella. The Executive Committee is vested with the authority to exercise the
powers of the full Board of Directors during the intervals between its meetings.
In 2000, the Executive Committee did not meet.
PXRE does not have a standing nominating committee. However, upon the
request of the Board of Directors, the Executive Committee has occasionally
functioned in this role.
Notwithstanding anything to the contrary set forth in any of PXRE's
previous or future filings under the Securities Act of 1933, as amended, or
under the Securities Exchange Act of 1934, as amended, that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
following Report of the Audit Committee of the Board of Directors of PXRE shall
not be incorporated by reference into any such filing.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF PXRE
The Audit Committee of the PXRE Board of Directors (the "Committee") is
composed of 5 independent directors and operates under a written charter adopted
by the Board of Directors (Appendix A). The members of the Audit Committee are
Bernard Kelly (Chairman), F. Sedgwick Browne, Franklin D. Haftl, Philip R.
McLoughlin and David W. Searfoss. The Committee recommends to the Board of
Directors (for the Board's recommendation to shareholders) the selection of
PXRE's independent accountants.
Management is responsible for PXRE's internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of PXRE's consolidated financial statements in accordance with
auditing standards generally accepted in the United States of America and to
issue a report thereon. The Committee's responsibility is to monitor and oversee
these processes.
In this context, the Committee has met and held discussions with management
and the independent accountants. Management represented to the Committee that
PXRE's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, and
the Committee has reviewed and discussed PXRE's consolidated financial
statements with management and the independent accountants. The Committee
discussed with the independent accountants matters required to be discussed by
Statement on Auditing Standards No. 61 (Communications with Audit Committees),
as modified or supplemented. PXRE's independent accountants also provided to the
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), as modified or
supplemented, and the Committee discussed with the independent accountants that
firm's independence.
9
12
Based upon the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants to the Committee, the Committee
recommended to the Board of Directors that PXRE's audited consolidated financial
statements be included in PXRE's Annual Report on Form 10-K for the year ended
December 31, 2000 for filing with the Securities and Exchange Commission.
Audit Committee:
Bernard Kelly (Chairman)
F. Sedgwick Browne
Franklin D. Haftl
Philip R. McLoughlin
David W. Searfoss
COMPENSATION OF DIRECTORS
CASH COMPENSATION. In 2000, non-employee directors received an annual
retainer of $25,000 (plus an additional $3,000 for Committee Chairpersons)
payable at the beginning of the year plus Board and standing committee meeting
fees of $1,500 per meeting. During the 2000 fiscal year, PXRE paid a total of
$129,000 in directors' fees. See "Other Compensation" below.
OTHER COMPENSATION. Under the PXRE Director Equity and Deferred
Compensation Plan (the "Director Compensation Plan"), non-employee directors may
elect to defer receipt of the annual retainer and fees for services as a member
of the Board and such directors are allowed to elect, prior to the subject year,
to receive all or a portion of the annual retainer amount and the
fee-for-services amount, in PXRE Common Shares or options to purchase PXRE
Common Shares. Deferred amounts are credited with earnings (losses) mirroring
the fund or funds provided in the PXRE 401(k) Savings and Investments Plan (the
"401(k) Plan") that are designated by the director. The number of shares which
may be awarded to a director upon such director's election to receive Common
Shares in lieu of all or a portion of the annual retainer, and the
fee-for-services amount, is the number of whole shares equal to (i) the portion
of the annual retainer, and the fee-for-services amount, for which the director
has made such election, divided by (ii) the "fair market value" per Common
Share, as determined pursuant to the Director Compensation Plan.
The number of whole Common Shares subject to an option grant under the
Director Compensation Plan is determined by dividing the portion of the annual
retainer, and the fee-for-services amount, for which the director has made such
election by the "option value", as determined pursuant to the Director
Compensation Plan. The exercise price per share under each option is equal to
the "fair market value" per share, as determined pursuant to the Director
Compensation Plan. Options granted under the Director Compensation Plan are
immediately exercisable and may be exercised until the tenth anniversary of the
date of grant. In the event a director terminates service on the Board, such
person's options are exercisable for three years after the date of termination
of service, but not beyond the original expiration date. In the event of death
of a director after terminating service on the Board, any outstanding options
expire on the later of the date applicable to the director at the time the
director terminated service or one year from the date of death, provided that in
no event may an option be exercised beyond its original expiration date.
For purposes of the Director Compensation Plan, "fair market value" means
(i) the average of the high and low share prices quoted for PXRE Common Shares
on the New York Stock Exchange over the twenty (20) trading days prior to the
December 31 immediately prior to the calendar year for which the annual retainer
is payable, and (ii) the average of the high and low share prices quoted for
PXRE Common Shares on
10
13
the New York Stock Exchange on the date of the meeting for which the
fee-for-services relate. For purposes of the Director Compensation Plan, "option
value" means (i) the value of an option determined as of December 31 immediately
preceding the calendar year for which the annual retainer is payable in
accordance with the Black-Scholes option valuation model, discounted by 20%, and
(ii) the value of an option determined as of the date of the meeting for which
the fee-for-services relate and computed as provided above.
During the 2000 fiscal year, no PXRE Common Shares were awarded pursuant to
the Director Compensation Plan; however, options for 48,598 shares at an
exercise price of $12.8125, were granted pursuant to the Director Compensation
Plan to the directors who elected to receive options to purchase PXRE Common
Shares.
The Director Compensation Plan is administered by the Board of Directors.
The Board has full power and authority to construe and interpret the Director
Compensation Plan and adopt and amend such rules and regulations for the
administration of the Director Compensation Plan as it deems desirable. The
Board may amend the Director Compensation Plan as it deems advisable, provided
that shareholder approval is required for any amendment to the Director
Compensation Plan which (i) materially increases the benefit accruing to
participants under the Director Compensation Plan, (ii) increases the number of
securities which may be issued under the Director Compensation Plan, or (iii)
materially modifies the requirements for participants in the Director
Compensation Plan. Additionally, no amendment may materially and adversely
affect any right of a director with respect to any option previously granted
without such director's written consent. The Board may terminate the Director
Compensation Plan at any time. If not earlier terminated by the Board, the
Director Compensation Plan will terminate immediately following the annual
meeting of PXRE's shareholders in 2007.
Under the PXRE Director Stock Plan, as amended (the "Director Stock Plan"),
each non-employee director is automatically granted annually, on the date of
PXRE's annual general meeting, an option exercisable (subject to a three-year
vesting period) for the purchase of 5,000 PXRE Common Shares at a price per
share equal to the market value at the date of grant. Each option becomes vested
and exercisable ratably over the three years immediately following its date of
grant. In the event a director terminates service on the Board by reason of
death, retirement (defined to be retirement as of the annual general meeting of
shareholders coinciding with or next following attainment of age 72) or
disability, the total number of option shares will become immediately
exercisable and will continue to be exercisable for three years (but not beyond
its original expiration date). In the event a director terminates service on the
Board other than by reason of death, disability or retirement, such person's
options (to the extent vested and exercisable upon such termination) will be
exercisable for three months after the date of termination of service, but not
beyond the original expiration date. In the event of death of a director after
terminating service on the Board, any outstanding options will expire on the
later of the date applicable to the director at the time the director terminated
service or one year from the date of death, provided that in no event may an
option be exercised beyond its original expiration date. Each option and all
rights thereunder are nonassignable and nontransferable other than by will or
the laws of descent and distribution, or pursuant to a qualified domestic
relations order (as described in Section 414(p) of the Code). No option may be
repriced after the date of grant (other than in connection with an adjustment in
the Company's Common Shares, as provided in the Plan).
On the date of the annual meetings of shareholders in 1995 and 1996,
options for 1,000 shares were granted, pursuant to the Director Stock Plan, to
each non-employee director then in office at exercise prices of $23.25 and
$24.95, respectively. On the date of the annual meetings of shareholders in
1997, 1998 and 1999, options for 3,000 shares, and on the date of the annual
meeting of shareholders in 2000, options for 5,000 shares, were granted,
pursuant to the Director Stock Plan, to each non-employee director then in
office at
11
14
exercise prices of $28.14, $31.11, $17.70 and $14.79, respectively. As of the
Record Date, options for a total of 126,000 shares had been granted pursuant to
the Director Stock Plan, of which a total of 71,000 are currently exercisable.
Additionally, commencing in 2000, under the Director Stock Plan each
non-employee director is automatically granted annually, on the date of PXRE's
annual general meeting, 1,000 PXRE Common Shares subject to certain
restrictions, which restrictions lapse ratably over a period of 3 years from the
date of grant (other than in the case of a change of control, the Common Shares
of PXRE ceasing to be publicly traded or the death, disability or retirement of
the director, which will result in a lapse of the restriction). As of the Record
Date, 8,000 restricted shares had been granted pursuant to the Director Stock
Plan, 1,000 of which are currently vested. Directors who are granted restricted
PXRE Common Shares under the Director Stock Plan are entitled to receive
dividends on and to vote such shares during the restricted period.
The Director Stock Plan is administered by the Board of Directors, which is
authorized to interpret the Director Stock Plan but has no authority with
respect to the selection of directors to receive options, the number of shares
subject to the Director Option Plan or to each grant thereunder, or the option
price for shares subject to options. The Board may amend the Director Option
Plan as it deems advisable but may not, without further approval of the
shareholders, increase the maximum number of shares under the Director Stock
Plan or options or restricted shares to be granted thereunder, change the option
price or price of the restricted shares provided in the Director Stock Plan,
extend the period during which options or restricted shares may be granted or
exercised, or change the class of persons eligible to receive options or
restricted shares.
Under the PXRE Director Deferred Stock Plan (the "Director Plan"), eligible
non-employee directors of PXRE upon becoming directors are each granted the
right to receive 2,000 Common Shares (subject to anti-dilution adjustments) at
certain specified times following their respective terminations as PXRE
directors. As of the Record Date, eligible non-employee PXRE directors as a
group have the right to receive a total of 10,000 Common Shares pursuant to the
terms of the Director Plan.
On each date on which dividends are paid to holders of PXRE Common Shares,
each director who has been granted the right to receive Common Shares under the
Director Plan is paid an amount in cash equal to the product of (i) the dividend
per share for the applicable dividend payment date and (ii) the number of shares
which have been granted to the director but which have not yet been delivered.
The Director Plan is administered by the Board of Directors, which may
amend or terminate the Director Plan at any time. However, no such amendment or
termination may reduce the number of shares that had been granted to the
directors prior to such amendment or termination.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, is
recommending that the firm of KPMG ("KPMG") be appointed as PXRE's independent
accountants for the fiscal year ending December 31, 2001. This recommendation is
being presented to the shareholders for their approval at the Annual Meeting.
KPMG has not previously audited PXRE's financial statements. PXRE's financial
statements were audited by PricewaterhouseCoopers from July 1, 1986 through
December 31, 2000. A representative of each of KPMG and PricewaterhouseCoopers
is expected to attend the Annual Meeting, with the opportunity to make a
statement if he or she so desires and to respond to questions. Shareholders at
the Annual Meeting will also be asked to vote to refer the determination of the
accountants' remuneration to the Board of Directors.
12
15
The Board of Directors has, subject to the approval of the shareholders,
selected KPMG as the independent auditor of PXRE for the fiscal year ending in
December 31, 2001, and the shareholders are being asked to approve that
selection.
PXRE's previous auditor, PricewaterhouseCoopers, notified the Company on
March 12, 2001 that it declined to stand for re-appointment as PXRE's auditor
for fiscal year 2001. PricewaterhouseCoopers' decision followed the
recommendation of the Audit Committee of the PXRE's Board of Directors, and the
Board of Directors' determination on February 13, 2001, to conduct a review of
auditing services and to invite PricewaterhouseCoopers, KPMG and another firm of
independent auditors to make proposals to the Board of Directors for the
provision of auditing services.
The reports of PricewaterhouseCoopers on PXRE's financial statements for
the fiscal years ended December 31, 2000 and 1999 were unqualified and contained
no adverse opinion or disclaimer of opinion and no such report was qualified or
modified as to uncertainty, audit scope, or accounting principles. During the
past two fiscal years and the interim period preceding PricewaterhouseCoopers'
election not to stand for re-appointment, PXRE had no disagreements with
PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, and no events of
the nature required to be reported under Item 304(a)(1)(v) of Regulation S-K
have occurred.
The retention of KPMG was recommended by the Audit Committee of the Board
of Directors and approved by the Board of Directors on April 3, 2001. During the
past two fiscal years, PXRE has had no consultations with KPMG concerning: (a)
the application of accounting principles to a specific transaction or the type
of opinion that might be rendered on PXRE's financial statements as to which a
written report was provided to PXRE or as to which PXRE received oral advice
that was an important factor in reaching a decision on any accounting, auditing
or financial reporting issue; or (b) any matter that was either the subject of a
disagreement or a reportable event within the meaning of Item 304(a)(1) of
Regulation S-K. KPMG will be present at the Annual Meeting and will have the
opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions.
PXRE filed its Form 8-K on March 16, 2001, reporting
PricewaterhouseCoopers' election not to stand for reappointment, and filed its
Form 8-KA on April 10, 2001, reporting the engagement of KPMG as PXRE's
independent auditor subject to the approval of PXRE's shareholders.
AUDIT FEES, FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES AND ALL
OTHER FEES
The aggregate fees for professional services rendered by
PricewaterhouseCoopers and Ernst & Young in respect of PXRE's Lloyd's Syndicate
for the audit of PXRE's 2000 annual financial statement and the reviews of the
financial statements included in PXRE's Forms 10-Q for 2000 are estimated to be
$598,000, of which $463,000 have been billed through March 31, 2001.
PricewaterhouseCoopers provided no financial information systems design and
implementation services for PXRE during 2000. The aggregate fees for other
professional services (principally comprising tax services) rendered by
PricewaterhouseCoopers for PXRE during 2000 are estimated to be $368,000, of
which $368,000 have been billed through March 31, 2001. The Audit Committee of
the PXRE Board of Directors considered whether the provision of such other
services is compatible with maintaining PricewaterhouseCoopers' independence.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE
APPOINTMENT OF KPMG AS INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2001 AND THE REFERRAL TO THE BOARD OF DIRECTORS OF THE
DETERMINATION OF THE ACCOUNTANTS' REMUNERATION.
13
16
EXECUTIVE COMPENSATION
The following tables and narrative text describe the compensation paid in
2000 and the two prior fiscal years to PXRE's Chief Executive Officer and PXRE's
four other most highly compensated executive officers. Also described below is
certain future compensation such individuals may be eligible to receive upon
retirement or following certain terminations of employment or certain changes of
control.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------- ----------------------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND BONUS OTHER ANNUAL STOCK STOCK COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($)(1) COMPENSATION(2) AWARDS($)(3) OPTIONS(#)(4) ($)(5)
- ------------------ ---- -------- ------- --------------- ------------ ------------- ------------
Gerald L. Radke..................... 2000 $519,100 -- 78,930 $112,500 82,000 $29,044
Chairman, President and 1999 494,000 $70,000 224,986 510,250 -- 28,014
Chief Executive Officer 1998 475,000 -- -- 243,115 15,142 232,021
Michael J. Bleisnick................ 2000 350,788 -- -- 62,500 50,000 24,821
Executive Vice 1999 348,095 25,000 -- 314,000 -- 24,065
President -- London Market 1998 303,662 -- -- 140,118 7,977 210,116
Operations
James F. Dore(6).................... 2000 321,471 -- 65,948 62,500 50,000 15,527
Executive Vice President, 1999 182,418 33,000 23,055 278,400 -- 4,200
Treasurer and Chief 1998 -- -- -- -- -- --
Financial Officer
Gordon Forsyth, III................. 2000 347,135 -- -- 62,500 50,000 23,207
Executive Vice 1999 301,729 33,000 -- 255,125 -- 22,048
President -- North American 1998 288,750 -- -- 140,118 7,977 210,116
Operations
Michael J. Toman(7)................. 2000 294,376 -- -- 62,500 50,000 17,889
Executive Vice 1999 274,225 33,000 -- 245,312 -- 14,025
President -- Direct Reinsurance 1998 144,800 60,000 -- 415,953 -- 4,200
- ---------------
(1) For 1999, consists of discretionary cash bonuses awarded in 2000 in respect
of fiscal year 1999. For 1998, consists of cash bonuses awarded in 1999 in
respect of fiscal year 1998 pursuant to PXRE's Restated Employee Annual
Incentive Bonus Plan (the "Bonus Plan").
(2) Consists of amounts paid to reimburse Mr. Radke for taxes paid by him (i) in
respect of the Bermuda reorganization, (ii) in respect of income he may be
treated as having received for income tax purposes relating to PXRE's
provision of Bermuda housing for Mr. Radke and to PXRE's reimbursement of
travel expenses incurred by Mr. Radke when traveling to Bermuda, and (iii)
in respect of income arising from the forgiveness of certain accrued
interest on an outstanding loan. (See column entitled "All Other
Compensation".) The loan was repaid in full on March 1, 1998. With respect
to Mr. Dore, consists of amounts paid to reimburse Mr. Dore for taxes paid
by him in respect of income he may be treated as having received for income
tax purposes relating to PXRE's provision of Bermuda housing for Mr. Dore
and to PXRE's reimbursement of travel expenses incurred by Mr. Dore when
traveling to Bermuda.
(3) No restricted shares were awarded under the Bonus Plan in respect of fiscal
years 1998, 1999 or 2000. Includes awards to Messrs. Radke, Dore, Bleisnick,
Forsyth and Toman, respectively, in respect of fiscal year 1998, of 7,381,
0, 4,254, 4,254 and 13,500 restricted PXRE Common Shares, and in respect of
fiscal year 1999 of 26,000, 15,000, 16,000, 13,000 and 12,500 restricted
PXRE Common Shares, in each case pursuant to PXRE's 1992 Officer Incentive
Plan. Pursuant to the 1992 Officer Incentive Plan, such restricted shares
will vest in four equal annual installments, with the final installment on
February 11,
14
17
2003. During the holding periods, such shares are entitled to receive
dividends, if any, declared with respect to PXRE Common Shares. The
aggregate holdings and market value of restricted stock held on December 31,
2000 by Mr. Radke was 35,759 restricted shares with a market value of
$603,433; by Mr. Dore was 20,000 restricted shares with a market value of
$337,500; by Mr. Bleisnick was 20,870 restricted shares with a market value
of $352,181; by Mr. Forsyth was 18,620 restricted shares with a market value
of $314,212; and by Mr. Toman was 27,875 restricted shares with a market
value of $470,390.
(4) Consists of non-qualified options granted in respect of PXRE Common Shares
pursuant to PXRE's 1992 Officer Incentive Plan.
(5) For Mr. Radke, consists of: $25,730, $24,700 and $23,750 contributed by PXRE
in 2000, 1999 and 1998, respectively, to the 401(k) Plan (which is a
contributory defined contribution plan), $1,712 paid by PXRE during each of
2000, 1999 and 1998 with respect to a supplemental term life insurance
policy for Mr. Radke's benefit, $1,602 paid by PXRE during each of 2000,
1999 and 1998 with respect to a supplemental disability insurance policy for
Mr. Radke's benefit, $4,642 representing the amount of interest accrued in
1997 and forgiven in respect of a loan of $70,125 made to Mr. Radke in 1988,
the full principal amount of which was outstanding during 1997 and was
repaid on March 1, 1998 and, for 1998, $204,957 paid in February 1999 (but
earned as of December 31, 1998) pursuant to the Transnational Re Officer
Incentive Plan assumed by PXRE in the Merger (the "TREX Plan"); for Mr.
Dore, consists of $8,327 contributed by PXRE in 2000 to the 401(k) Plan and
$7,200 and $4,200 paid to Mr. Dore during 2000 and 1999 with respect to a
car allowance; for Mr. Bleisnick, consists of: $17,621, $16,865 and $14,437
contributed by PXRE in 2000, 1999 and 1998, respectively, to the 401(k)
Plan, $7,200 paid by PXRE to Mr. Bleisnick during 2000, 1999 and 1998 with
respect to a car allowance, and, for 1998, $188,479 paid in February 1999
(but earned as of December 31, 1998) pursuant to the TREX Plan; for Mr.
Forsyth, consists of: $16,007, $14,848 and $14,437 contributed by PXRE in
2000, 1999 and 1998, respectively, to the 401(k) Plan, $7,200 paid by PXRE
to Mr. Forsyth during 2000, 1999 and 1998 with respect to a car allowance,
and, for 1998, $188,479 paid in February 1999 (but earned as of December 31,
1998) pursuant to the TREX Plan; and for Mr. Toman, consists of $10,689 and
$6,825, contributed by PXRE in 2000 and 1999 to the 401(k) Plan, $7,200,
$7,200 and $4,200 paid by PXRE to Mr. Toman during 2000, 1999 and 1998 with
respect to a car allowance.
(6) Joined PXRE in June 1999.
(7) Joined PXRE in June 1998.
15
18
OPTION GRANTS IN LAST FISCAL YEAR
During 2000, 900,450 options were granted pursuant to PXRE's 1992 Officer
Incentive Plan.
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL YEAR PRICE ($/SH) DATE VALUE ($)(2)
- ---- -------------- ------------ ------------ ---------- ------------
Gerald L. Radke..................... 82,000 9.1% $12.50 2/8/10 $424,670
Michael J. Bleisnick................ 50,000 5.5 12.50 2/8/10 $259,000
James F. Dore....................... 50,000 5.5 12.50 2/8/10 $259,000
Gordon Forsyth, III................. 50,000 5.5 12.50 2/8/10 $259,000
Michael J. Toman.................... 50,000 5.5 12.50 2/8/10 $259,000
- ---------------
(1) Consists of non-qualified options granted pursuant to PXRE's 1992 Officer
Incentive Plan. The exercise price of the options listed in the above table
is 100% of the fair market value of PXRE's Common Shares on the date of
grant (February 8, 2000). For this purpose, the fair market value of a share
of PXRE's Common Stock is the average of the high and low prices per share
quoted on the New York Stock Exchange on the date of grant. The options
listed above become exercisable in four equal annual installments, subject
to the grantee remaining in the continuous employ of PXRE or its affiliates
for at least one year from the date of the grant, except where such
employment terminates by reason of death, permanent disability or retirement
at or after age 65 with PXRE's consent; provided, however, that upon the
earlier of (i) a change of control of PXRE or (ii) the Common Shares of PXRE
ceasing to be publicly traded, any unexercised portion of an option will
become exercisable. Options may also be surrendered in exchange for a cash
payment in the event of a change of control of PXRE or the cessation of
public trading of the Common Shares of PXRE, in each case under certain
circumstances. Options are not transferable by a grantee other then by will
or the laws of descent and distribution, and during the lifetime of a
grantee an option will be exercisable only by the grantee or, if the grantee
is legally incapacitated, by the grantee's duly appointed guardian or legal
representative. The 1992 Officer Incentive Plan authorizes the administering
committee to include in individual stock option agreements with grantees a
provision allowing grantees to satisfy any federal, state or local income
tax liabilities resulting from option exercises by having PXRE withhold the
appropriate number of Common Shares at the time of exercise (subject in each
instance to committee approval), but the 1992 Officer Incentive Plan does
not provide for cash payments by PXRE to cover any such income taxes.
(2) In accordance with the Commission's rules, in order to determine grant date
present values in the above table, PXRE used the Black-Scholes model of
option valuation, adjusted to reflect an option term of 5 years, which
represents the weighted average (by number of options) over the past ten
years of the length of time between the grant dates of options under PXRE's
plans and their exercise dates for the named executive officers. The model
also assumes: (i) an interest rate that represents the interest rate on a
U.S. government zero coupon bond with a maturity equal to the term of the
grant; (ii) volatility calculated using a weekly stock price for five years
(260 weeks) prior to the grant date; and (iii) dividends estimated at the
annual rate of $0.24 per share. Based on this model, the present value of
the options on the February 8, 2000 grant date was determined to be $5.18
per option. PXRE does not advocate or necessarily agree that the
Black-Scholes model can properly determine the value of an option.
16
19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT DECEMBER 31, 2000
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY STOCK
SHARES 12/31/00 OPRIONS AT 12/31/00
ACQUIRED ON VALUE (#)(2) ($)(3)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ------------------------- -------------------------
Gerald L. Radke............. 0 $ 0 90,276/93,999 $ 0/358,750
Michael J. Bleisnick........ 14,571 80,653 50,337/56,334 $73,158/218,750
James F. Dore............... 0 0 0/50,000 $ 0/218,750
Gordon Forsyth, III......... 14,086 80,914 49,812/56,334 $70,812/218,750
Michael J. Toman............ 0 0 0/50,000 $ 0/218,750
- ---------------
(1) Represents the difference between the closing prices of PXRE's Common Shares
as reported on the New York Stock Exchange on the dates of exercise and the
exercise prices of the options.
(2) For Mr. Radke, consists of options for 184,275 PXRE Common Shares granted in
1993-2000 pursuant to PXRE's 1992 Officer Incentive Plan at exercise prices
ranging from $12.50 to $32.938 per share, 90,276 of which options were
exercisable at December 31, 2000. For Mr. Bleisnick, consists of options for
12,193 PXRE Common Shares granted in 1992 pursuant to PXRE's 1988 Stock
Option Plan at exercise prices of $10.875 per share, all of which options
were exercisable at December 31, 2000, and options for 94,478 PXRE Common
Shares granted in 1993-2000 pursuant to PXRE's 1992 Officer Incentive Plan
at exercise prices ranging from $12.50 to $32.938 per share, 38,144 of which
options were exercisable at December 31, 2000. For Mr. Forsyth, consists of
options for 11,802 PXRE Common Shares granted in 1992 pursuant to PXRE's
1988 Stock Option Plan at an exercise price of $10.875 per share, all of
which options were exercisable at December 31, 2000, and options for 94,344
PXRE Common Shares granted in 1993-2000 pursuant to PXRE's 1992 Officer
Incentive Plan at exercise prices ranging from $12.50 to $32.938 per share,
38,010 of which options were exercisable at December 31, 2000. For Messrs.
Dore and Toman, consists of 50,000 PXRE Common Shares granted in 2000
pursuant to PXRE's 1992 Officer Incentive Plan at an exercise price of
$12.50 per share, none of which options were exercisable at December 31,
2000.
(3) Represents the difference between the closing price of PXRE's Common Shares
as reported on the New York Stock Exchange on December 29, 2000 ($16.875)
and the exercise prices of the options.
17
20
PENSION PLAN
The following table indicates estimated total annual benefits payable under
the PXRE Reinsurance Company Retirement Plan and the Supplemental Executive
Retirement Plan as a Life Annuity upon retirement at age 62 in 2000, to persons
in specified final average compensation and years of service classifications.
YEARS OF SERVICE
------------------------------------------------
AVERAGE ANNUAL EARNINGS 5 10 15 20 25
----------------------- ------- ------- ------- -------- -------
$125,000........................................ $16,667 $33,333 $50,000 $ 50,000 $62,029
150,000........................................ 20,000 40,000 60,000 60,374 75,467
175,000........................................ 23,333 46,667 70,000 71,124 88,904
200,000........................................ 26,667 53,333 80,000 82,824 102,342
225,000........................................ 30,000 60,000 90,000 92,624 115,779
250,000........................................ 33,333 66,667 100,000 103,374 129,217
275,000........................................ 36,667 73,333 110,000 114,124 142,654
300,000........................................ 40,000 80,000 120,000 124,874 156,092
400,000........................................ 53,333 106,667 160,000 167,874 209,842
500,000........................................ 66,667 133,333 200,000 210,874 263,592
600,000........................................ 80,000 160,000 240,000 253,874 317,342
700,000........................................ 93,333 186,667 280,000 296,874 371,092
800,000........................................ 106,667 213,333 320,000 339,874 424,842
900,000........................................ 120,000 240,000 360,000 382,874 478,592
These benefits include benefits that may be payable from the Retirement
Plan, the Supplemental Executive Retirement Plan and the Savings Plan (which are
attributable to the Target Benefit Plan). The benefits in the above table are
not subject to any deduction for Social Security or other offset amounts.
For each of the named current executive officers, annual covered
compensation for 2000 is as follows: Mr. Radke: $694,128; Mr. Bleisnick:
$426,193; Mr. Forsyth: $407,857; Mr. Dore: $363,000; and Mr. Toman: $323,000.
Annual covered compensation consists of base salary (as shown in the "Salary"
column of the Summary Compensation Table) and the average amount of bonuses paid
(including the value of the portion of bonuses paid in shares of restricted
stock) over the preceding 10 years (or shorter period of employment). The full
years of credited service for each of the named current officers is as follows:
Mr. Radke: 25, Mr. Bleisnick: 16, Mr. Forsyth: 14, Mr. Dore: 1, and Mr. Toman:
2.
18
21
STOCK PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of PXRE's
previous or future filings under the Securities Act of 1933, as amended, or
under the Securities Exchange Act of 1934, as amended, that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
following Stock Performance Graph and Report of the Human Resources Committee of
the Board of Directors of PXRE shall not be incorporated by reference into any
such filings.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL
RETURN AMONG PXRE, S&P 500 AND
DOW JONES PROPERTY AND CASUALTY INDEX
PXRE CORP S&P 500 DOW JONES P&C
--------- ------- -------------
1995 100 100 100
1996 96 123 118
1997 132 164 167
1998 103 211 158
1999 57 255 118
2000 74 232 192
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1995. For each subsequent year, the
total return for PXRE and for each index is stated as of December 31 of such
year.
19
22
REPORT OF THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS OF PXRE
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation:
PXRE Group Ltd. (the "Company") has implemented compensation policies,
plans and programs which seek to increase the profitability of the Company, and
thus shareholder value, by aligning closely the financial interests of the
Company's executives with those of its shareholders. Emphasis is placed on the
achievements of the Company as an integrated unit.
The Human Resources Committee of the Company has established an executive
compensation program to achieve the following goals:
1. To attract and retain key executives critical to the long-term
success of the Company.
2. To promote the enhancement of shareholder value.
3. To reward executives for long-term strategic management.
4. To support a performance-oriented environment resulting in above
average total compensation for above average Company results.
COMPENSATION MIX
The Company's executive compensation program consists of three components
(base salary, annual incentives and long-term incentives) designed to promote
the above-stated goals.
BASE SALARY. Base salary is targeted at the competitive median for
competitors in the reinsurance industry. For the purpose of establishing base
salary levels, the Company from time to time compares the levels of executive
base salary paid by it to those levels paid to the executives of other public
and private reinsurance companies in the United States.
Executive salaries are reviewed by the Committee in the first quarter of
each year. The Chief Executive Officer submits an annual salary plan to the
Committee and the Committee reviews the plan and determines any appropriate
modifications. Any increases in an individual executive's salary from year to
year are based on (1) increased contribution to the Company by the individual
and (2) increases in median competitive pay levels. Based upon these factors, in
2000 the Committee determined that it was appropriate to increase executive base
salaries by an average of 6.80%.
ANNUAL INCENTIVES. The Restated Employee Annual Incentive Bonus Plan,
adopted by the Company in 1992 and amended in 1994, 1997 and 2000, is intended
to reflect the Company's belief that management's contribution to shareholder
returns comes from maximizing earnings at an appropriate level of risk across
the reinsurance cycle. Annual target bonuses are determined for each eligible
employee, and following the end of each year the Committee determines to what
extent each employee's target bonus for the year has been earned. The full
target bonus will be paid to the employee if the Company achieved a 13% after
tax return on equity for the year. The bonus award will be adjusted up to 150%
or down to 0% of the target bonus based on the actual return on equity achieved
by the Company for the year.
Pursuant to the Annual Bonus Plan, the bonus award for all officers is
payable 70% in cash and 30% in restricted stock, at the current market value.
The partial payment in restricted stock ties a portion of each executive's
annual incentive award to the Company's stock price over time. Employees who are
not officers of the Company receive the entire bonus award in cash. The
Committee may adjust the cash portion of any
20
23
bonus award (plus or minus 20% for officers, 40% for non-officers) to reflect
individual performance. The maximum cash and restricted stock bonus awards that
a participant who is a covered employee at the end of the year may receive is $1
million.
Commencing with the year 1996, awards to officers who are tax residents of
Belgium (or other countries) that tax restricted stock awards in the year
received (rather than in the year that the restrictions lapse) are made in cash
units credited to an unfunded account. The units vest at the same time that
restricted stock awards vest, and are paid to the officer in cash. No earnings
or losses (other than fluctuations in the PXRE stock price) are credited to the
account.
In February 2001, the Committee determined that no bonus amounts were
payable to the Company's executive officers under the Restated Employee Annual
Incentive Bonus Plan based on the 2000 performance of the Company. Nevertheless,
upon the recommendation of management that to attract and retain key performers
even in years with poor results it was necessary to pay reasonable bonus
amounts, the Committee determined to grant discretionary bonus amounts
aggregating approximately $466,000 outside of the Annual Bonus Plan,
representing for most non-executive officers receiving bonuses approximately 20%
of target bonuses determined as provided in the Annual Bonus Plan.
LONG-TERM INCENTIVES. In March 1992, the Committee made its final awards
under the Company's 1988 Stock Option Plan, which was effectively "frozen" by
the Board of Directors as of December 31, 1992 so that no further options could
thereafter be granted under such Plan. In May 1992, the shareholders of the
Company approved the 1992 Senior Executive Incentive Plan, which provided for
grants of long-term incentive awards to senior executives of the Company. The
Plan was amended in 1994 by vote of the shareholders of the Company to allow the
grant of long-term incentive awards to any officer of the Company, and the name
of the Plan was changed to 1992 Officer Incentive Plan to recognize the broader
base of participants. The 1992 Officer Incentive Plan was also amended in 1997,
1999 and 2000. The 1992 Officer Incentive Plan provides the Committee with the
flexibility to grant long-term incentives in two forms: stock options and
restricted stock.
Each year, the Committee determines whether it is appropriate to grant
stock option and/or restricted stock awards to eligible officers. Grants for
each officer are determined based on industry norms, with the Committee having
the flexibility to adjust individual awards. Awards are considered in
conjunction with the annual salary plan and the overall goals of the Company's
executive compensation program. The Committee believes that its past option
grants under the 1988 Stock Option Plan have focused, and its option and
restricted stock grants under the 1992 Officer Incentive Plan will continue to
focus, management's attention on building shareholder value.
The Committee granted non-qualified options to purchase a total of 900,450
Common Shares at an exercise price of $12.50 per share (market value on grant
date) in February of 2000 to the Company's officers pursuant to the 1992 Officer
Incentive Plan. Grants with respect to 96,650 restricted Common Shares were made
during or with respect to 2000 pursuant to the 1992 Officer Incentive Plan. Such
grants were made pursuant to the Committee's evaluation of each grantee's base
salary and position with the Company, the fair market value of the Common Shares
on the date of grant and competitive compensation levels within the industry.
The Internal Revenue Code has set certain limitations on the deductibility
of compensation paid to a public company's five most highly compensated
executive officers. Provided that other compensation objectives are met, it is
the Committee's intention that executive compensation be deductible for federal
income tax purposes. Accordingly, to comply with regulations regarding the
deductibility of executive
21
24
compensation expense, the Restated Employee Annual Incentive Bonus Plan and the
1992 Officer Incentive Plan were amended in 1997.
CHIEF EXECUTIVE COMPENSATION
The Committee determined the Chief Executive Officer's compensation for
2000 based upon a number of factors and criteria. The Chief Executive Officer's
base salary was increased by 4% during 2000, based upon a review of similar
companies adjusted for size and capitalization and upon review of the Chief
Executive Officer's performance as regards the achievement of long-term
strategic goals and the management of the Company.
In February 2000, the Chief Executive Officer received options to purchase
a total of 82,000 Common Shares at an exercise price of $12.50 per share (market
value on grant date) under the 1992 Officer Incentive Plan. He also received a
grant of 9,000 restricted Common Shares under the 1992 Officer Incentive Plan.
As discussed above, such grants were determined pursuant to the Committee's
evaluation of the Chief Executive Officer's base salary and position with the
Company, the fair market value of the Common Shares on the date of grant and
competitive CEO compensation levels within the industry.
Human Resources Committee:
Robert W. Fiondella (Chairman)
Franklin D. Haftl
Halbert D. Lindquist
Wendy Luscombe
David Searfoss
February 12, 2001
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the five current members of the Human Resources Committee, Mr. Fiondella
and Mr. Searfoss are executive officers and directors of Phoenix Home Life. As
of the Record Date, Phoenix Home Life owned 9.5% of the issued and outstanding
Common Shares of PXRE. PXRE and various of its subsidiaries are parties to
investment advisory agreements with Phoenix Investment Partners, a subsidiary of
Phoenix Home Life. Pursuant to these agreements, which are terminable by either
party on 60 days' notice, Phoenix Investment Partners provides, or arranges for
another party to provide, investment research and advice, implementation of
investment transactions, clearing agent and custodian services, monthly reports
on portfolio transactions and other related services. The amount of investment
advisory fees payable pursuant to such agreements generally is equal to 0.15% of
average assets under management plus out-of-pocket expenses. PXRE and its
subsidiaries incurred fees of approximately $439,000 to Phoenix Investment
Partners for services performed in fiscal year 2000. Management of PXRE expects
such fees for 2001 will, in the aggregate, be approximately $408,000, plus
out-of-pocket expenses. PXRE believes that the terms of the investment advisory
agreements described above are no less favorable to PXRE and its affiliates than
terms available for comparable services from unaffiliated persons.
22
25
TOMAN EMPLOYMENT AGREEMENT
Michael J. Toman, Executive Vice President -- Direct Reinsurance, and PXRE
Reinsurance are parties to an employment agreement, dated as of June 8, 1998,
providing for Mr. Toman's employment with PXRE Reinsurance for a three year term
expiring in June 2001. See the Summary Compensation Table above and "Termination
and Change of Control Arrangements" below for information regarding Mr. Toman's
compensation and regarding Mr. Toman's participation in various PXRE benefit
plans with termination and change of control arrangements. Mr. Toman's
employment agreement with PXRE Reinsurance contains non-solicitation,
confidentiality and non-competition provisions.
TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
EXECUTIVE SEVERANCE PLAN. In 1989, the Board of Directors approved an
Executive Severance Plan for designated officers of PXRE, which has been renewed
for an additional five year term to and including August 31, 2004.
The Executive Severance Plan provides to designated officers certain
benefits in the event of termination without cause or constructive discharge
within 6 months before a "Change of Control" (as defined in the Executive
Severance Plan) or within one year thereafter (two years for Mr. Gerald Radke).
The Executive Severance Plan provides that a "Change of Control" will be deemed
to have occurred if (i) any person (as defined in the Executive Severance Plan)
other than PXRE or Phoenix Home Life or its affiliates becomes the beneficial
owner, directly or indirectly, of securities representing 30% or more of the
combined voting power of PXRE's outstanding securities; (ii) the shareholders of
PXRE approve a merger or consolidation of PXRE with another corporation (other
than certain situations where the shareholders of PXRE before such transaction
continue in control after such transaction) or a sale or other disposition of
all or substantially all of the assets of PXRE; (iii) the shareholders of PXRE
approve a plan of liquidation or dissolution of PXRE; or (iv) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of PXRE and any new director whose election
was approved by at least two-thirds of the directors who were directors at the
beginning of the period or whose election had previously been so approved, cease
to constitute a majority of the Board.
The benefits consist of a lump sum cash payment equal to (i) one year's
salary (for Mr. Gerald Radke two years if terminated within 12 months of a
change of control), (ii) accrued but unpaid bonuses, (iii) present value of
employer contributions to PXRE's Pension Plan and the 401(k) Plan (the
"Qualified Plans") for one year (two years for Mr. Radke if terminated within 12
months of a change of control), and (iv) amounts forfeited under the Qualified
Plans on termination of employment, reduced by the present value of payments
under any employment agreement, Company policy or statute. In addition, one
year's coverage (two years for Mr. Radke) is provided to the officer under
PXRE's medical, life and other welfare benefit plans in which the officer
participated. In determining these benefits, the one and two year periods do not
extend past age 65.
PXRE also indemnifies the officer for any excess parachute payment excise
tax (and the excise and income tax on such indemnity) for which the officer may
become responsible, as well as attorney's fees required to enforce such
officer's rights under the Plan.
The Executive Severance Plan has a five year term subject to renewal only
if the Board of Directors determines prior to the end of such term (or the end
of any subsequent renewal term) that the Plan shall be renewed; the Plan
continues in the event of a change of control until all obligations are
satisfied.
23
26
Messrs. Gerald Radke, Dore, Bleisnick, Forsyth and Toman participate in the
Plan, with 37 others. Were a change of control of PXRE to have occurred on
December 31, 2000 and if the employment of the named executive officers with
PXRE had then been terminated as provided in the Executive Severance Plan, it is
estimated that the compensation payable to Messrs. Gerald Radke, Dore,
Bleisnick, Forsyth and Toman would have been $1,040,000, $330,000, $340,000,
$370,000 and $293,000, respectively.
1988 STOCK OPTION PLAN. Adopted in 1988 and subsequently frozen, the 1988
Stock Option Plan (the "1988 Option Plan") provided for the grant of incentive
stock options intended to qualify as incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), as well as non-
qualified stock options not intended to qualify as incentive stock options under
the Code. As of the Record Date, Messrs. Bleisnick and Forsyth held outstanding
non-qualified options to purchase 12,193 and 11,802 Common Shares, respectively,
pursuant to the 1988 Option Plan. All of such options had vested in accordance
with the provisions of the 1988 Option Plan, and were exercisable, as of the
Record Date. (Mr. Gerald Radke is omitted from the foregoing discussion because
as of the Record Date he had fully exercised the options granted to him pursuant
to the 1988 Option Plan. Messrs. Dore and Toman are omitted from the foregoing
discussion because they were not participants in the 1988 Option Plan.)
Under the 1988 Option Plan, an optionee may elect up to 60 days following a
Change of Control (as defined below) to surrender all or part of his or her
non-qualified options and to receive a cash payment equal to the greater of (a)
the excess of the fair market value of the option shares surrendered over the
exercise price for such shares, or (b) the excess of the per share net worth (as
determined under the 1988 Option Plan) of the shares to which the surrendered
option pertains on the date of surrender over the per share net worth of such
shares on the date the option was granted.
For this purpose, the 1988 Option Plan provides that "fair market value"
for non-qualified options is the higher of (a) the highest trading price of
PXRE's shares (as determined under the 1988 Option Plan) during the 90-day
period ending on the date of such election, or (b) if the transaction occurs as
the result of a person acquiring a 30% interest in PXRE, the highest price per
share shown on Schedule 13D or any amendment thereto filed by any person holding
30% or more of such shares, or (c) if the Change of Control (as defined below)
occurs as the result of shareholder approval of a merger or consolidation (as
described in the 1988 Option Plan) or any sale or other disposition of all or
substantially all of the assets of PXRE, the highest price paid pursuant to such
transaction.
In addition, under the 1988 Option Plan an optionee may elect up to 60 days
following the cessation of the public trading of the shares of PXRE (other than
where due to the fraud or other misconduct of the management of PXRE) to
surrender all or part of his or her non-qualified options and receive a cash
payment equal to the greater of (a) the excess of the fair market value of the
shares subject to the surrendered option over the exercise price, or (b) the
amount determined under the per share net worth valuation method described
above. For this purpose, "fair market value" means the highest public trading
value (as determined under the 1988 Option Plan) during the 90-day period ending
on the date of such cessation of public trading.
The 1988 Option Plan also provides that if an optionee does not make an
election under either of the above provisions on or before the 60th day
following a Change of Control (as defined below) resulting from certain mergers
and consolidations, sale of all or substantially all of the assets of PXRE, the
liquidation or dissolution of PXRE, or such cessation of public trading, the
optionee will be deemed to have made such election as of such 60th day, the
optionee will receive the cash payment that would be due upon such an election
and the optionee's option and surrender rights will be deemed to have been
canceled.
24
27
Under the 1988 Option Plan, an election is not transferable other than by
will or the laws of intestacy. An optionee who is subject to Section 16(b) of
the Exchange Act may only exercise an election in compliance with Rule 16b-3(e)
thereunder.
The 1988 Option Plan provides that a "Change of Control" will be deemed to
have occurred if (i) any person (as defined in the Plan) other than PXRE or
Phoenix Home Life or an affiliate thereof, becomes the beneficial owner,
directly or indirectly, of securities representing 30% or more of the combined
voting power of PXRE's outstanding securities; (ii) the shareholders of PXRE
approve a merger or consolidation of PXRE with another corporation (other than
certain situations where the shareholders of PXRE before such transaction
continue in control after the transaction) or a sale or other disposition of all
or substantially all of the assets of PXRE; (iii) the shareholders approve a
plan of liquidation or dissolution of PXRE; or (iv) during a period of two
consecutive years individuals who at the beginning of such period constituted
the Board of Directors of PXRE and any new director whose election was approved
by at least two-thirds of the directors who were directors at the beginning of
the period or whose election had been previously so approved, cease to
constitute a majority of the Board.
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN. Adopted in 1992, the
Restated Employee Annual Incentive Bonus Plan, as amended (the "Restated Bonus
Plan"), provides for annual employee incentive awards comprised of cash and, in
the case of senior and junior executives, restricted PXRE Common Shares
("Restricted Shares"). More specifically, the Restated Bonus Plan (i) links the
funding of the annual bonus pool for all participating employees to PXRE's
"return on equity" (defined in the Restated Bonus Plan as PXRE's consolidated
net income for the fiscal year divided by PXRE's average stockholders' equity
for such fiscal year); and (ii) provides the Restated Bonus Plan Committee
(which administers the Restated Bonus Plan) with the discretion to adjust the
final annual bonus pool amount for allocation to participants by up to plus or
minus 25% of such pool. Subject to certain adjustments as provided in the
Restated Bonus Plan, a maximum of 350,000 PXRE Common Shares has been reserved
for awards of Restricted Shares under the Restated Bonus Plan. Authorized and
unissued shares may be used for grants of Restricted Shares under the Restated
Bonus Plan.
Restricted Share awards consist of grants of PXRE Common Shares, which are
generally subject to forfeiture if the recipient's employment with PXRE
terminates during the restricted period specified in the award. Subject to the
discretion of the Restated Bonus Plan Committee, the period must be at least
three years, measured as provided in the Restated Bonus Plan (the "Restricted
Period"). The recipient of a Restricted Share award is entitled to all the
rights of a shareholder with regard to the awarded Restricted Shares during the
Restricted Period, including the right to receive dividends on, and to vote, the
Restricted Shares, except that the Restricted Shares may not be sold, pledged or
otherwise transferred by the recipient until the applicable Restricted Period
has lapsed. The lapse of the Restricted Period may be accelerated in the event
of a recipient's death, permanent disability or retirement, as determined by the
Restated Bonus Plan Committee. The Restated Bonus Plan Committee requires a
participant receiving an award of Restricted Shares to enter into a Restricted
Share Agreement with PXRE containing the foregoing restrictions and such other
terms as the Restated Bonus Plan Committee may deem advisable.
Upon the earlier of a Change of Control of PXRE or the shares of PXRE
ceasing to be publicly traded, any remaining Restricted Period applicable to
Restricted Shares will immediately lapse. For this purpose, a "Change of
Control" of PXRE will be deemed to have occurred if (i) any person (as defined
in the Restated Bonus Plan) other than PXRE or Phoenix Home Life or an affiliate
thereof, becomes the beneficial owner, directly or indirectly, of securities
representing 30% or more of the combined voting power of PXRE's outstanding
securities; (ii) the shareholders of PXRE approve a merger or consolidation of
PXRE with
25
28
another corporation (other than certain situations where the shareholders of
PXRE before such transaction continue in control after the transaction) or a
sale or other disposition of all or substantially all of the assets of PXRE;
(iii) the shareholders of PXRE approve a plan of liquidation or dissolution of
PXRE; or (iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board of Directors of PXRE and
any new director whose election was approved by at least two-thirds of the
directors who were directors at the beginning of the period or whose election
had been previously so approved, cease to constitute a majority of the Board.
Messrs. Gerald Radke, Dore, Bleisnick, Forsyth and Toman are each eligible
to participate in the Restated Bonus Plan. No Restricted Share and cash bonus
awards under the Restated Bonus Plan were made to Messrs. Gerald Radke, Dore,
Bleisnick, Forsyth and Toman in respect of fiscal year 2000. Restricted Share
and cash bonus awards under the Restated Bonus Plan, and discretionary cash
bonuses outside of the Restricted Bonus Plan, were made in prior years to those
individuals, as noted in the Summary Compensation Table above.
1992 OFFICER INCENTIVE PLAN. Adopted in 1992, the 1992 Officer Incentive
Plan, as amended (the "1992 Officer Incentive Plan") provides for both grants of
options and awards of Common Shares with certain restrictions (the "Restricted
Shares") to officers of PXRE or its affiliates. More specifically, the 1992
Officer Incentive Plan provides for the grant of incentive stock options (the
"Incentive Stock Options") which are intended to qualify as incentive stock
options under Section 422 of the Code, non-qualified stock options which are not
intended to qualify as incentive stock options under the Code ("Non-Qualified
Options"), and awards of Restricted Shares, as determined by the 1992 Incentive
Plan Committee, which administers the 1992 Officer Incentive Plan. Subject to
certain adjustments as provided in the 1992 Officer Incentive Plan, a maximum of
2,750,000 PXRE Common Shares has been reserved for issuance upon the exercise of
options and grants of Restricted Shares under the Plan. Authorized but unissued
shares may be used for grants of options or Restricted Shares under the Plan.
All options and Restricted Share awards are evidenced by agreements (the
"Stock Option Agreements" and the "Restricted Share Agreements", respectively)
on the terms and conditions set forth in the 1992 Officer Incentive Plan and
such other terms and conditions as the 1992 Incentive Plan Committee determines.
Options must be granted within ten years of the adoption of the 1992
Officer Incentive Plan. Options have a term not to exceed ten years. The
exercise price for Incentive Stock Options and Non-Qualified Options must be
equal to or exceed the fair market value of the Common Shares on the date the
option is granted. Option granted under the 1992 Officer Incentive Plan cannot
be repriced (other than in connection with an adjustment of the PXRE Common
Shares).
Subject to the 1992 Incentive Plan Committee's discretion, no part of any
option may be exercised unless the optionee remains in the continuous employ of
PXRE or its affiliates for at least one year from the date of grant of the
option, except where such employment terminates by reason of death, permanent
disability or retirement with PXRE's consent.
No options are transferable by an optionee other than by will or the laws
of descent and distribution, and during the lifetime of an optionee an option is
exercisable only by the optionee or, if the optionee is legally incapacitated,
by the optionee's duly appointed guardian or legal representative.
The 1992 Officer Incentive Plan provides that the restricted period for all
Restricted Shares is subject to the 1992 Incentive Plan Committee's discretion,
but in no event will be less than three years (the "Restricted Period"). The
lapse of the Restricted Period may be accelerated in the event of a recipient's
death, permanent
26
29
disability or retirement, as determined by the 1992 Incentive Plan Committee.
Restricted Shares are generally subject to forfeiture if the recipient's
employment with PXRE terminates during the Restricted Period. The recipient of a
Restricted Share award is entitled to all the rights of a shareholder with
regard to the awarded Restricted Shares during the Restricted Period, including
the right to receive dividends on, and to vote, the Restricted Shares, except
that the Restricted Shares may not be sold, pledged or otherwise transferred by
the recipient until the applicable Restricted Period has lapsed.
The 1992 Officer Incentive Plan provides that upon the earlier of (i) a
Change of Control of PXRE or (ii) the Common Shares of PXRE ceasing to be
publicly traded, any unexercised portion of an option shall become exercisable
and any Restricted Period applicable to Restricted Shares shall immediately
lapse. The Plan incorporates the same definition of "Change of Control" as that
contained in the Restated Bonus Plan.
The 1992 Incentive Plan Committee may grant to an optionee for up to 60
days following a Change of Control the right to elect to surrender all or part
of his or her option and to receive a cash payment equal to the greater of (a)
the excess of the fair market value of the option shares surrendered over the
exercise price for such shares, or (b) except for Incentive Stock Options, the
excess of the per share net worth (as determined under the 1992 Officer
Incentive Plan) of the shares to which the surrendered option pertains on the
date of surrender over the per share net worth of such shares on the date the
option was granted.
For this purpose, the 1992 Officer Incentive Plan provides that "fair
market value" for Non-Qualified Options is the higher of (a) the highest trading
price of PXRE's Common Shares (as determined under the Plan) during the 90-day
period ending on the date of such election, or (b) if the transaction occurs as
the result of a person acquiring a 30% interest in PXRE, the highest price per
Common Share shown on the Schedule 13D or any amendment thereto filed by any
person holding 30% or more of such shares, or (c) if the Change of Control
occurs as the result of shareholder approval of a merger or consolidation (as
described in the Plan) or any sale or other disposition of all or substantially
all of the assets of PXRE, the highest price per share paid pursuant to such
transaction. With respect to Incentive Stock Options, "fair market value" means
fair market value as determined under Section 1.2(g) of the Plan.
In addition, under the 1992 Officer Incentive Plan the optionee may elect
up to 60 days following the cessation of the public trading of PXRE Common
Shares (other than where due to the fraud or other misconduct of the management
of PXRE) to surrender all or part of his or her option and receive a cash
payment equal to the greater of (a) the excess of the fair market value of the
shares subject to the surrendered option over the exercise price, or (b) except
for Incentive Stock Options, the excess of the per share net worth (as
determined under the Plan) of the shares to which the surrendered option
pertains on the date of surrender over the per share net worth of such shares on
the date the option was granted. For this purpose, "fair market value" means the
highest trading price (as determined under the Plan) during the 90-day period
ending on the date of such cessation of public trading, except that for
Incentive Stock Options it means "fair market value" as determined under Section
1.2(g) of the Plan.
The 1992 Officer Incentive Plan also provides that if an optionee does not
make an election under either of the above provisions on or before the 60th day
following a Change of Control resulting from certain mergers and consolidations,
the sale of all or substantially all of the assets of PXRE, the liquidation or
dissolution of PXRE, or such cessation of public trading, the optionee will be
deemed to have made such election as of such 60th day, the optionee will receive
the cash payment that would be due upon such an election and the optionee's
option and surrender rights will be deemed to have been canceled.
Messrs. Gerald Radke, Dore, Bleisnick, Forsyth and Toman are each eligible
to participate in the 1992 Officer Incentive Plan. In February 2000, Restricted
Share awards were granted under the Plan to
27
30
Messrs. Radke, Dore, Bleisnick, Forsyth and Toman in respect of fiscal year
2000, as noted in the Summary Compensation Table above. Non-qualified options
were also granted in prior years under the Plan to Messrs. Radke, Dore,
Bleisnick, Forsyth and Toman.
TRANSNATIONAL RE OFFICER INCENTIVE PLAN. The Transnational Re Officer
Incentive Plan (the "TREX Plan"), an unfunded non-tax-qualified officer
incentive plan was assumed by PXRE in the Merger. According to the TREX Plan,
designated officers of TREX (who are also officers of PXRE) were eligible to
participate in an annual bonus pool equal to the net income (as defined) of TREX
for each fiscal year in the period 1994 through 1998. In connection with the
Merger, the TREX Plan was amended to provide that, among other things, the
annual bonus pool for 1996 would be the final annual bonus pool under the TREX
Plan and, therefore, amounts payable pursuant to the TREX Plan would be frozen
as of December 31, 1996. The bonuses payable under the TREX Plan were earned in
three equal installments. The first installment was earned as of December 31,
1996 and was paid in February 1997; the second installment was earned as of
December 31, 1997 and was paid in February 1998; the third installment was
earned on December 31, 1998 and was paid in February 1999. Each of the named
executive officers (other than Messrs. Dore and Toman) was a participant in the
TREX Plan and the amounts earned thereunder in the applicable years are set
forth in note (5) to the Summary Compensation Table.
CERTAIN BUSINESS RELATIONSHIPS
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Reference is made to the discussion under "EXECUTIVE
COMPENSATION -- Compensation Committee Interlocks and Insider Participation"
regarding the investment advisory relationship between PXRE and its subsidiaries
and Phoenix Investment Partners, a subsidiary of Phoenix Home Life.
SELECT REINSURANCE LTD.
PXRE is a party to two quota share agreements with Select Re, which
principally involve a multi-year fee-based undertaking by PXRE through the year
ending December 31, 2003 to present business to Select Re. The undertaking,
which is subject to adjustment based on Select Re's shareholders' equity, was
approximately $22.1 million in aggregate premium for 2000. See Exhibit 10.3 to
PXRE's Form S-4 Registration Statement dated August 18, 1999 (File No.
333-85451). Gerald Radke (Chairman, President and Chief Executive Officer of
PXRE) and Jeffrey Radke (Executive Vice President of PXRE and President of its
Bermuda reinsurance subsidiary PXRE Reinsurance Ltd.) are on the Board of
Directors of Select Re and are shareholders of Select Re. Gerald Radke is
Co-Vice Chairman of Select Re and Jeffrey Radke was formerly the President of
Select Re. A Committee of the Board of Directors of PXRE (composed of Mr. Haftl
and Ms. Luscombe) independently reviewed the quota share agreements between PXRE
and Select Re and approved the same.
In addition to the quota share arrangement between PXRE and Select Re, PXRE
entered into several other reinsurance transactions with Select Re during 2000.
Under these reinsurance transactions, Select Re provided retrocessional support
on a corresponding number of finite and other lines reinsurance transactions
underwritten by PXRE. These reinsurance transactions involved reinsurance
premiums ceded during 2000 of $26,814,000 in the aggregate. As of December 31,
2000, net assets of $21,226,000 were due in the aggregate from Select Re in
connection with such reinsurance transactions, all of which were secured by way
of reinsurance trust, letters of credit or funds held.
28
31
BERMUDA HOUSING
During 1999, PXRE entered into a lease for a home in Bermuda for a term of
2 years that allows it to provide housing for PXRE's Chairman, President and
Chief Executive Officer at an annual rental of approximately $90,000, and a
lease for an apartment in Bermuda for a term of 2 years that allows it to
provide housing for PXRE's Chief Financial Officer at an annual rent of
approximately $72,000 in the first year and $84,000 in the second year. These
leases relieve PXRE from providing such persons with a housing allowance.
During 2000, PXRE entered into an arrangement in which Jeffrey Radke leased
and PXRE provided a mortgage for a home in Bermuda for a term of up to 20 years
(the "PXRE Mortgage"). This arrangement fixed the housing allowance expense
borne by PXRE for the period of the PXRE Mortgage. The PXRE Mortgage, in the
amount of $500,000, was provided to a charitable trust to purchase the house and
PXRE received a second mortgage (the first mortgage is in the amount of
$1,000,000). The PXRE Mortgage earns interest at a rate dependent on the sale
price of the home at the conclusion of the PXRE Mortgage. The interest rate is
set at LIBOR.
MORGAN, LEWIS & BOCKIUS
During 2000, PXRE retained, and during 2001, PXRE intends to retain,
Morgan, Lewis & Bockius LLP to provide legal services. Mr. Browne, a director of
PXRE, is senior counsel to Morgan, Lewis & Bockius LLP.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires PXRE's directors and executive
officers, and persons who own more than 10% of a registered class of PXRE's
equity securities, to file with the Commission and the New York Stock Exchange
reports of ownership and changes in ownership of PXRE's registered equity
securities. Executive officers, directors and greater-than-10% stockholders are
also required to furnish PXRE with copies of all Section 16(a) reports they
file.
Based solely upon a review of the copies of such reports, and any
amendments thereto, furnished to PXRE and written representations that no Form 5
reports were required, PXRE believes that, during the fiscal year ended December
31, 2000 all Section 16(a) filing requirements applicable to PXRE's executive
officers, directors and greater-than-10% stockholders were complied with.
SHAREHOLDER PROPOSALS
If a shareholder desires to present a proposal for inclusion in next year's
Proxy Statement, such shareholder must submit such proposal in writing to PXRE
for receipt not later than December 31, 2001. Proposals must comply with the
proxy rules relating to shareholder proposals, in particular Rule 14a-8 under
the Exchange Act, to be included in PXRE's year 2002 proxy materials.
Shareholders who wish to submit a proposal for consideration at PXRE's year 2002
annual general meeting of shareholders, but who do not wish to submit a proposal
for inclusion in PXRE's proxy materials pursuant to Rule 14a-8 under the
Exchange Act, should deliver a copy of their proposal no later than 45 days
prior to the day and month of the notice of meeting pertaining to the 2001
Annual General Meeting of Shareholders during the year 2002 and otherwise comply
with the notice provisions of PXRE's Bye-Laws. If a shareholder fails to provide
such 45 day notice, the respective proposal need not be addressed in the proxy
materials and the proxies may exercise their discretionary voting authority when
the proposal is raised at the annual general meeting. In either case,
29
32
proposals should be delivered to PXRE Group Ltd., Suite 231, 12 Church Street,
Hamilton HM 11, Bermuda, Attention: Secretary.
GENERAL
PXRE's Annual Report to Shareholders, which contains financial statements
for the year ended December 31, 2000, as well as other information concerning
the operations of PXRE, is being sent to you with this Proxy Statement.
PXRE FILES WITH THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL REPORT ON
FORM 10-K. A copy of the report for fiscal year 2000 will be furnished without
charge to any shareholder sending a written request therefor to: Secretary, PXRE
Group Ltd., Suite 231, 12 Church Street, Hamilton HM 11, Bermuda, or can also be
accessed through PXRE's web site at: www.pxregroup.com. At the date of this
Proxy Statement, management has no knowledge of any matters other than those set
forth in this Proxy Statement or referred to in the accompanying Notice of
Annual General Meeting, which will be presented at the Annual Meeting. However,
if any other matters should properly come before the meeting it is intended that
Proxies shall be voted thereon in accordance with the best judgment of the
person or persons voting such Proxies.
PXRE GROUP LTD.
Hamilton, Bermuda
30
33
APPENDIX A
PXRE GROUP LTD.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
1. PURPOSE. The Audit Committee (the "Committee") of the Board of
Directors (the "Board") of PXRE Group Ltd. (the "Corporation") assists the Board
in fulfilling its oversight responsibilities. The Audit Committee will consider
and review the financial reporting process and related financial information to
be reported to shareholders and others, the Corporation's internal control
environment, the audit of the Corporation's annual financial statements, and the
Corporation's procedures for monitoring compliance with laws and regulations. In
performing its duties, the Committee will maintain effective working
relationships with the Board, management and the Corporation's independent
auditor.
2. MEMBERSHIP. The Committee will be comprised of at least three members,
including a Chairman, all of whom will be selected by, and who will serve at the
pleasure of, the Board. All members of the Committee must be "independent
directors," meaning directors who are independent of management of the
Corporation and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of independent judgment as Committee members.
All members of the Committee must be, or must become within a reasonable period
of time after appointment to the Committee, persons qualified by experience,
education or training in business, finance or accounting, so that they are able
to read, understand and critically review fundamental business financial
statements. At least one member of the Committee must have accounting or related
financial management expertise. In addition, no person may be a member of the
Committee if his or her service on the Committee would violate any restriction
on service imposed by any rule of the United States Securities and Exchange
Commission ("SEC") or any exchange on which the Common Shares of the Corporation
are traded.
3. MEETINGS. The Committee will hold such regular meetings as may be
necessary and such special meetings as may be called by the Chairman of the
Audit Committee or at the request of the independent auditor. The Committee may
ask members of management, the Corporation's independent auditor, or others
whose advice and counsel are relevant to the issues then being considered by the
Committee, to attend any meetings and to provide such pertinent information as
the Committee may request. The Committee will keep written minutes of its
meetings.
4. COMMITTEE RESPONSIBILITIES. The Committee will have the following
responsibilities:
a. To recommend to the Board (for the Board's recommendation to
shareholders) the independent auditor to be selected to conduct audits of
the annual financial statements of the Corporation and to assure that the
independent auditor is ultimately accountable to the Committee and the
Board; if referred by the shareholders, to review and approve the
compensation of the independent auditor; to evaluate the independent
auditor; and, where appropriate, to recommend to the Board the discharge of
the independent auditor.
b. To require the independent auditor to submit to the Committee
periodically a formal written statement delineating all relationships
between the independent auditor and the Corporation, including but not
limited to management consulting services provided by the independent
auditor, and related fees; to discuss with the independent auditor all such
relationships; and, based on such written statement and discussions, to
review and assess the independence of the independent auditor and recommend
that,
A-1
34
where appropriate, the Board take action in response to the independent
auditor's statement to satisfy itself of the independent auditor's
independence.
c. To consider, in consultation with the independent auditor and
financial management of the Corporation, the audit scope and plan of the
independent auditor.
d. To review with the independent auditor and management of the
Corporation at the conclusion of the audit:
i. the Corporation's annual financial statements and related
footnotes;
ii. the independent auditor's audit of and report on such financial
statements, including any significant accounting matters and findings
and management's responses to them;
iii. any significant changes in the independent auditor's audit
scope or plan from that previously presented to the Committee;
iv. any significant transactions not a normal part of the
Corporation's business and the manner in which they were accounted for
in such financial statements;
v. the independent auditor's qualitative judgments and
recommendations about the appropriateness of the Corporation's
accounting principles and practices, any proposed changes in such
accounting principles and practices and the degree of the Corporation's
implementation of previously recommended changes in accounting
principles and practices;
vi. any lack of cooperation or disputes with management encountered
by the independent auditor during the course of the audit, including any
restrictions on the scope of their work or access to requested
information; and
vii. other matters related to the conduct of the audit that should
be communicated to the Committee under generally accepted auditing
standards.
e. To determine whether to recommend to the Board that the audited
financial statements be included in the annual report of the Corporation to
be filed with the SEC.
f. To consider and review with the independent auditor and the
management of the Corporation the adequacy and effectiveness of the
Corporation's internal controls, including computerized information system
controls and security, and any significant findings and recommendations by
the independent auditor with respect to such controls, together with
management's responses.
g. To consider and review, prior to filing or release, annual reports
of the Corporation to be filed with the SEC and other published documents
containing the Corporation's annual financial statements, and to evaluate
whether the information in such reports and documents is consistent with
the information in the financial statements.
h. To consider and review, prior to filing or release, interim
financial reports of the Corporation to be filed with the SEC or otherwise
released to the public.
i. To prepare the report required to be included in the Corporation's
Proxy Statement disclosing whether the Committee has reviewed and discussed
the audited financial statements with management; has discussed matters
specified by the SEC with the independent auditor; has received from the
auditor disclosures regarding the auditor's independence as specified by
the SEC; and has taken whatever action
A-2
35
and prepared such other reports and letters as may be required from time to
time by the SEC and/or any exchange on which the Common Shares of the
Corporation are traded.
j. To review policies and procedures covering officers' expense
accounts and perquisites, including officers' use of corporate assets, and
to consider the results of any review of these areas by the independent
auditor.
k. To review, together with counsel for the Corporation, legal and
regulatory matters that may have a material effect on the Corporation's
financial statements.
l. To meet with the independent auditor and management in separate
executive sessions to discuss matters then being considered by the
Committee, that the Committee or any of these groups concludes should be
discussed privately with the Committee.
m. To review this Charter annually and update it when appropriate.
V. INVESTIGATIONS AND STUDIES. The Committee may conduct or authorize
investigations into or studies of matters within the Committee's scope of
responsibilities as described above, and may retain, at the expense of the
Corporation, independent counsel, auditors or others necessary to assist in any
such investigation or study.
A-3
36
PROXY PXRE GROUP LTD. PROXY
ANNUAL GENERAL MEETING OF SHAREHOLDERS
JUNE 12, 2001
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald L. Radke and James F. Dore, and
each of them, with full power of substitution, the proxies of the undersigned
to vote all of the Common Shares of PXRE Group Ltd. which the undersigned is
entitled to vote at the Annual General Meeting of Shareholders of PXRE Group
Ltd. to be held at the offices of PXRE Group Ltd., 99 Front Street, Hamilton
HM 12, Bermuda on June 12, 2001 commencing at 9:00 a.m., local time, and at any
adjournment or adjournments thereof, with all the powers the undersigned would
possess if personally present upon:
UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY
SHALL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF KPMG AS
INDEPENDENT AUDITORS AND TO REFER THEIR REMUNERATION TO THE BOARD OF DIRECTORS.
(see other side)
37
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
(1) ELECTION OF DIRECTORS:
[ ] FOR [ ] WITHHELD
(Except as indicated otherwise)
IF THERE IS ANY INDIVIDUAL DIRECTOR WITH RESPECT TO WHOM YOU DESIRE TO
WITHHOLD YOUR VOTE, YOU MAY DO SO BY MARKING THROUGH OR OTHERWISE STRIKING
OUT HIS OR HER NAME.
NOMINEES: F. Sedgwick Browne Bernard Kelly David W. Searfoss
(2) To approve the recommendation of the Board of Directors that KPMG be
appointed as the Company's independent auditors for the fiscal year
ending December 31, 2001 and to refer the determination of the auditor's
remuneration to the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(See other side)
Please sign exactly as your name
appears on this Proxy. If
signing for estates, trusts or
corporations, title or capacity
should be stated. If shares are
held jointly, each holder should
sign.
Dated: , 2001
--------------------
--------------------------------
Signature
--------------------------------
Signature